Home sales in Vancouver and Toronto had double-digit increases in October over the previous year, and prices in Toronto jumped as well, as the country’s most expensive markets continued their recovery after adjusting to tougher mortgage rules.
In the Vancouver area, sales soared 45 per cent to 2,858 homes last month, according to the Real Estate Board of Greater Vancouver. In the Toronto area, sales climbed 14 per cent to 8,491 homes, according to the Toronto Real Estate Board (TREB).
The activity helped buoy sale prices after more than a year of sluggish sales owing to stricter requirements for home loans in the federal government’s mortgage stress test, and to taxes on foreign buyers.
The benchmark home sale price across the Greater Toronto Area was $852,142 in October, a 6-per-cent increase over the previous year and the strongest annual rate of growth since December, 2017, according to TREB.
“We are seeing more buyers. There is a lot less caution and hesitation,” said Rochelle DeClute, a real estate broker with Union Realty Brokerage Inc., whose work covers the Toronto region.
Prices for every type of housing increased across Toronto and its suburbs. The average selling price of a detached house rose 3 per cent compared with the previous October, to $1,049,300. Semi-detached properties climbed 4 per cent to $852,669, townhouses increased 3 per cent to $676,802, and the average selling price of a condo soared 10 per cent to $617,419.
TREB expects home prices to continue rising. “While the current pace of price growth remains moderate, we will likely see stronger price growth moving forward if sales growth continues to outpace listings growth,” Jason Mercer, TREB’s chief market analyst, said in a statement accompanying the statistics.
In the Greater Vancouver Area, the benchmark sale price for all types of housing increased slightly from September to October, the first time in more than a year that home values did not decline.
“There is a clear indication that there is a trend of higher demand and higher buyer activity,” said Phil Moore, a real estate agent with Re/Max, who has worked in the Vancouver region for three decades. “We have seen activity pick up. The result is that prices have leveled off.”
However, at $992,900, the October price remains 6 per cent lower than it was a year ago.
Prices for every type of housing were down year over year, and every municipality showed lower prices except for Squamish and the Sunshine Coast. Detached houses were down 8 per cent to $1,410,500, townhouses decreased 6 per cent to $771,600 and condominiums were off 6 per cent to $652,500.
The slump in prices, along with low interest rates, has helped drive sales.
“There is a time where the consumer will see lower prices and say ‘these prices are pretty good, interest rates are good, I don’t want to miss the market,’ and they will jump in and then you will see an increase in activity like we are seeing now,” Mr. Moore said.
Although activity was higher than last year, there were fewer listings. The total number of homes listed for sale in the Vancouver region was 12,236 last month, down 6 per cent from the previous year.
The federal government’s mortgage rules, which went into effect in January, 2018, require home buyers to prove they can handle their mortgage payments with an interest rate that is two percentage points higher than the actual rate or the five-year benchmark rate from the Bank of Canada.
As well, B.C. and Ontario have imposed taxes on foreign buyers of residential real estate in an attempt to weed out speculators.