Home sales in Toronto and Vancouver soared in February as the condo market rebounded and low interest rates continued to push up prices of detached houses in the suburbs.
Sales in Canada’s two priciest real estate markets have been setting new monthly records during parts of the pandemic. With higher-income households benefiting from low borrowing costs and saving more, many buyers are seeking bigger properties where they can work from home.
In the Toronto region, home resales hit a record for February, 52.5 per cent higher year over year, with condos leading the way up, according to the Toronto Regional Real Estate Board. Condo resales in the city were 27 per cent higher than in January.
“Condo buyer confidence is returning,” said Simeon Papailias, senior partner with REC Canada, which specializes in condo sales. Condo rental rates are starting to increase, triggering investors to purchase condos again, according to Mr. Papailias.
After the pandemic’s work-from-home mandates started, downtown condos fell out of favour as people sought bigger properties for home offices and access to gardens and outdoor space.
The lower demand in the city of Toronto led to a surge in condo listings and a drop in prices. The average selling price for condos in the city was still 6 per cent lower than in February of last year, but 8 per cent higher than in January.
Over all, the home price index, which is adjusted for expensive transactions, rose 15 per cent year over year to $969,600 across the Toronto region, with the biggest price increases outside the city. In Simcoe County, north of the city, the index was up 35 per cent, and to the east in Durham region, the index was up 29 per cent.
The total number of properties for sale in the Toronto region was flat compared with the previous year. Although condo listings in the city were 50 per cent above February, 2020, the number was not as high as in the fall, when more condo owners were putting their units up for sale. Condo listings have decreased since the peak in October.
In Vancouver, home sales were 73 per cent higher than in February of last year, and 56 per cent above January, with increases for detached houses as well as condos.
The total number of properties for sale was 20 per cent below the 10-year average.
The home price index reached $1,084,000 last month, 7 per cent above February of last year and 3 per cent higher over January. The steepest price increases were outside the city of Vancouver, rising more than 30 per cent in Bowen Island and the Sunshine Coast.
“When you don’t have a lot of choice and you really want to buy, people tend to pay higher prices,” said Colette Gerber, chair of the Real Estate Board of Greater Vancouver. “More buyers are coming out, and properties are selling much quicker.”
Canada Mortgage and Housing Corp. and the Bank of Canada have recently raised concerns about rising mortgage debt. But although central bank Governor Tiff Macklem has said the housing market shows early signs of “excess exuberance,” he has said it is not as hot as Ontario and B.C.’s markets in 2016 and 2017.
Prices across all types of properties in Vancouver and Toronto are not increasing at the same pace as in 2016 and 2017, according to their real estate boards. However, values are skyrocketing in the suburbs and vacation areas. In Ontario, home prices in Prince Edward County and Kawartha Lakes are up more than 30 per cent year over year.
However, Mr. Macklem has said the country is in a “better position” owing to stricter mortgage qualifications and foreign residential real estate taxes. Those measures went into effect after 2016 and were designed to curb speculation and ensure that borrowers could afford their mortgage payments.
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