The warning calls about Toronto’s housing market are growing louder on Bay Street after another month of double-digit price gains.
The comments above & below are edited ([ ]) and abridged (…) excerpts from the original article by (BNN.ca)
BMO Capital Markets Chief Economist Doug Porter told BNN via email Friday, in response to fresh data from the Toronto Real Estate Board showing the average selling price across the Greater Toronto Area soared 27.7% year-over-year in February to $875,983 that:
“Toronto is not a market operating normally. My biggest concern here is that speculation will now take full command and the market will absolutely run out of control, eventually leading to a serious correction. Better for policymakers to take steps to cool things now, before conditions completely get out of hand.”
The price gains in Toronto have continued relentlessly despite new mortgage lending rules announced by the federal government last fall.
Finance Minister Bill Morneau told reporters in Toronto on Friday:
“I think what’s important for us is to be measured as we look at the market. We will consider the actions we have taken and how they are impacting the market – of course those actions take some time – and to consider the actions that will come forward in terms of risk sharing and how they will impact the market.”
Toronto’s housing supply crunch was on full display again in February.
- New listings of properties available for sale across the GTA plunged 12.5% year-over-year,
- the total inventory of active listings plummeted 50.5%,
- sales, meanwhile, rose 5.7% year-over-year to 8,014.
- The headline sales growth masks:
- underlying weakness for semi-detached properties (with sales dropping 9.5% from the previous year),
- and booming activity in the condo market (where sales soared 15.9% year-over-year and prices galloped ahead 19.2%).
- The headline sales growth masks:
TREB Director of Market Analysis, Jason Mercer, said in a statement:
“The listing supply crunch we are experiencing in the GTA has undoubtedly led to the double-digit home prices we are now experiencing on a sustained basis. Until we see a marked increase in the number of homes available for sale, expect very strong annual rates of price growth to continue. Over the past year, we have reached a point where government policies that target only the demand side of the market, whether we’re talking about foreign buyers or further changes to mortgage lending guidelines, will not be enough to balance market conditions and moderate the pace of price growth.”
…Wrote TD Deputy Chief Economist Derek Burleton, in an email to BNN:
“Conditions are ‘bubble-like’ no doubt. +20% price growth cannot be justified by any set of fundamentals, regardless of how many positives (immigration, decent job growth, low rates) may be driving GTA activity in recent years – but I prefer to characterize the situation in Toronto as ‘undesirably frothy.’
Meanwhile, Toronto Mayor John Tory has said he’s not going to panic, telling BNN in an interview Friday that:
“It’s a concern. We are watching it carefully. We are working very hard to convince the other governments – federal and provincial – that we have to address the supply of housing.”
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