Greater Toronto real estate is now earning far more than most owners could make working. Toronto Regional Real Estate Board (TRREB) data shows home prices soared in March. A typical home saw prices rise by half the region’s median wage in just over a single month. That’s a typical home. A detached home jumped in price by more than the median wage.
Toronto Home Prices Jump By More Than Half The Annual Median Wage… In Just A Month
Greater Toronto real estate’s composite benchmark, or typical, home reached a new high. The TRREB composite hit $1,007,600 in March, up an unbelievable 16.54% ($142,400) from last year. The City of Toronto benchmark hit $1,029,200, up 7.45% ($74,000) over the same period. The city’s price increase is huge. It just looks modest in contrast to the suburbs.
Greater Toronto Benchmark Price
The price of a typical home across Greater Toronto.Source: TRREB; Better Dwelling.
The annual rate of price growth is now accelerating for all segments of homes. A typical home across TRREB and in the City both increased by $38,000 over just a month. Many points can be made about this, but the most important is the monthly increase was universal. It didn’t matter if it was in the suburbs or the city. This likely had more to do with the expectations the Bank of Canada has set, than it does with supply.
It’s also worth a quick mention of how astronomically large these price increases are. The monthly increase for a composite (that’s typical, not detached), was more than half the median wage. On an annual basis, it comes in around 3x the median wage. This is an exceptionally strange amount for home prices to rise. It’s more typical of home prices in a country with a banking crisis — not a hot market.
Greater Toronto Detached Home Prices Are Up By Nearly A Quarter
Greater Toronto detached real estate continues to be the main driver of this trend. The TRREB detached benchmark hit $1,246,900 in March, up 23.58% ($235,600) from the same month last year. In the City of Toronto, it reached $1,426,100, up 17.84% ($216,300) over the same period. Almost one-quarter. That’s how much detached prices increased over the past year.
Greater Toronto Benchmark Price Change
The annual percent change of TRREB’s benchmark price for all home types.Source: TRREB; Better Dwelling.
Detached homes are the main driver of composite prices, especially in the burbs. Growth has accelerated for nine consecutive months, from an already substantial rate. TRREB detached prices increased $50,200 from a month before. City of Toronto detached prices increased by $63,600 over the same period. The single-month rise clears the median wage.
Toronto Condo Prices Rise Less Than Annual Rent Paid
Greater Toronto condo prices aren’t benefiting from the same national trend. TRREB’s benchmark condo price reached $607,500 in March, up 2.09% ($15,100) from the same month last year. The City of Toronto condo benchmark reached $630,300, up only 0.13% ($4,700) over the same period. Not even enough to cover typical rent, but the growth trend is starting to reverse. The City is even out of its single-month dip into negative territory.
Greater Toronto condo price growth is accelerating after almost a year of falling. Annual growth is very low relative to other markets, and one month doesn’t make a trend. It’s also worth considering if every market in the country is rising rapidly due to easy credit, this… is not great. The same credit conditions apply to condos in Toronto as they do to cottages in the Kawartha. Low growth would have been even worse in a market with less slack.
Location and segment are two things that stand out in last month’s numbers. Home prices for the Greater Region are getting close to the City. The premium for location is practically drying up, as people cut the urban cord.
In terms of segments, there’s also a clear trend — condo demand is much softer. Easy credit conditions inflated home prices across the country. Toronto condos prices barely moved. The lack of price movement in this environment indicates prices likely would have cratered in a tighter market. It will be interesting to see how tapering QE impacts this segment over the next few months.
The growth rate for prices is astronomical, and there’s a good chance it will accelerate. Last year home prices slid during May and June due to pandemic uncertainty. Even if prices stall here, a base-effect will print acceleration of annual growth. It may only be technical reasons, but the average consumer won’t understand that. Most will only see home prices are still earning more than they could working.
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