As we saw last week, the real estate market seems rather unstable at the moment, and we hear all kinds of guesses about the future of Toronto’s real estate market. We’ve put together some of the most interesting reads from the last week to keep you updated.
How much gold do you need to buy a home in Toronto and, more importantly, why would you care about the answer? The point is that the value of Canadian dollar, unlike gold, is easily manipulated by the government, making it poor criteria for assessing the “real” growth of prices on property. In other words, of assessing how “bubbly” Toronto real estate market is.
When measured in the price of gold, Toronto real estate isn’t showing the highs it was previously. At the end of 2016, the average price of a Toronto home sold for CA$729,922, roughly 440.96 oz of gold at the time. At the last peak of prices in 1989, the average home was sold for the equivalent of 606.58 oz of gold, 27% more expensive than last year. The all-time high for gold priced homes was 624.45oz in 2005, when the average home cost CA$335,907.
The issue is closely linked to the “missing middle” in Toronto’s real estate market discussed last week. Research for the Toronto Region Board of Trade shows half of those aged 18 to 39 want to own a detached house in the region’s priciest market — Toronto, where detached re-sale homes cost $1.6 million on average in April.
A leading Toronto business group is warning that unless that situation changes, the region could be compromising its ability to attracted talented professionals.
Toronto Life: We Bought a Crack House.
Apart from the #covfefe, one of the trending hashtags this week was #TorontoLife. The reason is a controversial article published there on Monday, which is a first-person story about a family buying an affordable house in Parkdale: “It was a crumbling Parkdale rooming house, populated by drug users and squatters and available on the cheap. We were cash-strapped, desperate to move and hemmed in by a hot market. Five years, three contractors and $1.1 million later, our home reno nightmare is finally over”.
The article was supposed to raise concerns over the unaffordable housing in Toronto and evoke sympathy for the family, but It seems that the effect was quite the opposite. Social media were bursting with angry posts about gentrification of the neighbourhoods like Parkdale and vulnerable groups being pushed out of the area.
Canadians became less confident this month about housing and prospects for the economy amid the troubles of a Toronto mortgage lender, according to telephone polling. The Bloomberg Nanos Canadian Confidence Index fell to 58.5 in the week ending May 26. Sentiment has suffered after mortgage lender Home Capital Group Inc. sought refinancing after a run on its deposits, and Moody’s Investors Service downgraded Canada’s largest banks. Toronto’s market has also shown signs of cooling after the introduction of foreign buyer’s tax in Ontario.
The Market Mogul: The Canadian Real Estate Market: Is A Crash Inevitable?
With the real estate prices in Toronto at an all time high, there is an increasing anxiety about the possibility of the US housing crisis of 2008 repeating itself in Canada. In the Greater Toronto area, the prices of residential homes have increased at a rate of 27.7% since last year.
However, it seems that the US crisis is unlikely to happen in Canada, because there are genuine reasons that are driving up the prices and it is not only about speculation. First, there are just not enough residential dwellings in Toronto, so the supply is limited. Second, the demand for housing in Toronto is increasing because of both immigration as well as people moving to Toronto from within Canada.