Ontario has announced plans for most of the province to enter Phase 3 as of Friday, with the exception of Toronto and a few other regions. The final phase of Ontario’s Action Plan means the re-opening of nearly all businesses, including gyms, theatres and restaurants. Indoor gathering limits will increase from 10 to 50 people, while outdoor attendance will increase to 100. High-risk businesses such as amusement and water parks, as well as buffets, will remain closed (sorry Mandarin). While it’s not yet known when Toronto might enter Phase 3, it’s clear that our real estate market has been anything but quarantined.
Prices climbed by almost 12% since June 2019 and the average price for a Toronto home broke the record-high previously set in April 2017. Seeking to cool down the market at the time, Ontario implemented tighter lending requirements and the Non-Resident Speculation Tax, colloquially known as the “Foreign Buyers Tax”, resulting in a correction across much of the province. However, it seems unlikely prices will drop again anytime soon*.
The two principal factors pushing real estate prices higher and higher in Toronto are increasing sales amidst a lack of available homes for sale. Buyers are competing in seemingly endless “bidding-wars” in a fiery hot seller’s market. Pent up consumer demand led to an increase of over 80% in residential transactions between May and June. In addition, buyers are currently enjoying extremely affordable mortgage interest rates, with some banks offering 5-year fixed-term mortgages as low as 2%.
Huge increases in sales took place while the residential sector continued to be undersupplied with available homes for sale, particularly in the low-rise market. The fact remains that there are simply not enough detached, semi-detached and townhouses available. Until supply can satisfy demand, this seller’s market and rising real estate prices are unlikely to disappear.
Daniel Shafro (2020, July 15) “Toronto Housing Prices Continue To Climb” Retrieved from https://mailchi.mp/3efc8f689ddf/toronto-real-estate-prices-continue-to-climb?e=e8a1d04381