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Toronto home prices climb above $800,000 for the first time since May 2017

After an 11-month slump, Toronto’s housing market is showing its first real signs of recovery

by Vanmala Subramaniam
May 3 2018, 12:33pm

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Toronto’s housing market is slowly showing signs of recovery, after a 11-month slump that saw average home prices plunge a record 32.1 percent.

The latest data from the Toronto Real Estate Board (TREB) shows that the average price of a home in the Greater Toronto Area surpassed the $800,000 mark last month, a number not seen since May 2017.

Last April, the Ontario government imposed tough regulatory changes to cool what they deemed as a housing market that had run rampant due to speculative forces. Between January and April 2017, home prices in Toronto soared an average 20 percent each month, to peak just above the million dollar mark.

But the Wynne government’s “Fair Housing Plan”, which included a 15 percent tax on foreign buyers of Toronto homes froze the market for months on end, wiping out almost a third of the value of an average home from its peak in April 2017.

A couple of other factors weighed on the housing market. Between July 2017 and the present, the Bank of Canada raised interest rates three times, and the Office of the Superintendent of Financial Institutions (OSFI) imposed stricter requirements on borrowers, including a “stress test” to measure a person’s ability to afford mortgage payments in the event of an interest rate rise.

The Toronto Real Estate Board’s latest figures are heartening for homeowners looking to sell, and others hoping to get back into the Toronto housing market. In April 2018, the average price of a home sold in the GTA reached $804,584 — this is the fourth straight month that home prices have risen.

"The comparison of this year’s sales and price figures to last year’s record peak masks the fact that market conditions should support moderate increases in home prices as we move through the second half of the year, particularly for condominium apartments and higher density low-rise home types," said Toronto Real Estate Board Director of Market Analysis Jason Mercer said in a press release Thursday morning.

Condominiums, particularly in downtown Toronto, were strangely spared from the impact of Ontario’s housing rules, presumably because in the wake of sky-high house prices, they had become the only kinds of property people could actually afford.

TREB figures show that condo prices climbed 3.2 percent year-over-year to reach almost $560,000. The average selling price for a detached home in the GTA was still 14.4 percent lower that this time last year.