The Heat Goes On In The Toronto Market

The rapid acceleration in prices in the Toronto area market continued in March, with the average price over $900,000, up 33% over last March. Eye-popping bidding wars were everywhere, with selling prices routinely going $300,000 or more over the asking price.

The Toronto condo apartment market, in particular, surged dramatically, with prices up 33% over last year, the same as detached and semi-detached homes. This continues a trend that accelerated late last year with the imposition of tougher mortgage qualification rules by the federal government, pushing buyers more and more toward condos as their only affordable option. My, how far we have come from just a few years ago, when many saw the condo market as oversupplied and heading for a correction.

Looking outside the City of Toronto, we see similar trends. Prices to the north and west of Toronto also increased in March by more than 30% year-over-year and, further north, (Simcoe) and West (Oshawa), prices increased by a jaw-dropping 50%. The lower prices in these area are obviously attracting buyers who can no longer afford the more central areas and aren’t willing to settle for a condo.


Not surprisingly, the inventory of homes for sale (total active listings in the month divided by sales for the month) remained extremely low, with year-over-year sales 18% higher while active listings were 35% lower. There were actually 15% more new listings this march, but homes and condos are flying off the shelf: average days on the market was reduced by 38%, from 16 to 10 days over the GTA as a whole.


There is no longer much doubt that the GTA real estate market is in a bubble, and fears are mounting that a correction may be coming soon. The provincial and Toronto municipal governments are considering changes that would tax speculators, believed to be one of the key driving forces behind the acceleration in prices. They are hoping that this will cool the market and bring about the ever-elusive ‘soft landing’, where prices level off or fall slightly and the market becomes more balanced. To me, though it seems more likely that changes like these, if they are effective at all, could actually cause the jarring correction they are trying to avoid. The next month will be very interesting…