Greater Toronto home prices are surging even faster after the central bank’s warning. Toronto Regional Real Estate Board (TRREB) data shows home prices soared in January. Low inventory and a long warning for interest rates, helped to drive demand to send prices to a new record. Warning people rates will rise months in advance appears to have the opposite effect of actually raising them.
Toronto Real Estate Prices Have Never Increased This Fast
Greater Toronto real estate prices are surging higher at the fastest pace in history. The TRREB composite benchmark price hit $1,259,900 in January, up 4.29% ($51,900) from the previous month. Prices are now 33.29% ($314,667) higher than last year — about the cost of a whole house in Canada just over a decade ago. It’s an unreasonable amount of price growth.
Greater Toronto Benchmark Price
The price of a “typical” composite home across Greater Toronto.
Source: TRREB; Better Dwelling.
In the City of Toronto, real estate prices are moving a little slower but still fast. The composite home price in the city hit $1,242,700 in January, up 2.22% ($27,000) from the month before. Compared to last year, prices are 24.64% ($245,668) higher, rising two-thirds the pace of the Greater Region. This tells us home prices in the suburbs are moving so fast, City prices are slowing down the whole index.
Greater Toronto Benchmark Price Change
The annual percent change of TRREB’s benchmark price for all home types.
Source: TRREB; Better Dwelling.
Toronto Real Estate Sales Had The 2nd Biggest January Ever
Greater Toronto real estate sales slipped lower but remained elevated compared to usual. TRREB reported 5,636 sales in January, down 18.2% from the same month last year. Home sales had the second strongest January on record, even with the sharp decline.
Toronto Real Estate Inventory Is Falling Slightly Slower Than Sales
The good news is new inventory fell slower than sales, slightly releasing pressure. When we say slight, there’s a real emphasis on slight. In January, there were 7,979 new listings across TRREB, down 15.5% from last year. The sales to new listings ratio was 70%, 20 percentage points above a balanced market. Greater Toronto’s new inventory is still tight enough to drive prices a lot higher.
The inventory problem is exacerbated by low inventory going into the month. January ended with just 4,140 active listings, down 44.0% from a year before. The sales to active listings ratio (SALR) needs to be below 20% for the market to be considered healthy. Last month the market came in at 136%. January is always tight since the odds are stacked against buyers, but not this tight.
The National Bank of Canada (NBF) noted the easing of inventory pressure. Though the bank was careful to note how much pressure still remains. On a seasonally adjusted basis, January’s inventory was a little better. Though it’s hard to notice when so much remains. “… with mortgage interest rates on the rise, we expect demand to cool in 2022,” wrote the bank.
Toronto: Home resale market conditions
Higher home prices motivate some to sell, but when they’re rising so fast, few want to leave anything on the table. Especially with the central bank whipping buyers into a frenzy with the warning of higher rates. Experts see slowing demand with higher rates, but they didn’t see over 30% home price growth, so it’s a tough sell. A large portion of the population is now worried the end of cheap debt is coming, and they may have to pay more.