According to the Toronto Regional Real Estate Board (TRREB), sales climbed to a record high of 9,812 in the month of July, representing an astounding 36 percent increase from the same period last year. At the same time, the average selling price of a home in Canada’s largest city rose by 17.4 percent to $934,611.
The unprecedented surge in prices has been largely attributed to several factors that have combined together to cause a “perfect storm” situation in the Toronto real estate market. Chief among these factors is the effects of the coronavirus pandemic. Although the pandemic led to a decrease in sales activity in April, the rebound in the market since then has been substantial. People who were previously unable to move due to job losses or other financial hardships have since recovered, resulting in an increased demand for homes.
At the same time, the effects of the pandemic have caused a considerable amount of wealth to be concentrated into the hands of those who are fortunate enough to have kept their jobs and those who had the financial security to invest in the stock market. This influx of wealth has enabled many buyers to purchase more expensive homes, further driving up prices. As well, the Bank of Canada decreasing interest rates to record lows also provided an incentive for people to consider buying a home, as it made borrowing more affordable.
The recent surge in Toronto’s housing market has been welcomed by many, especially those in the real estate industry. However, the sudden and drastic increase in prices is also causing concern for some, particularly those with lower incomes who are struggling to keep up with the rising costs of living. Despite this, TRREB insists that the market will continue to be strong in the months ahead as long as interest rates remain low and the economy continues to recover. In the meantime though, it appears that Toronto has entered a new era of real estate prices, with a drastic increase from what was seen in the past.
The sudden increase in Toronto’s housing prices in July has come as a surprise to many in the real estate market. The effects of the coronavirus pandemic, combined with record low interest rates and a surge in wealth from the stock market, have all contributed to the “perfect storm” situation that is leading to such rapid growth in the market. This growth is welcomed by those in the industry, but is causing difficulties for those with lower incomes who are unable to keep up with the rising costs of living. Regardless, it appears that the market will continue to be strong for the months ahead, as long as interest rates remain low and the economy continues to recover. With this new era of high prices here to stay, it is sure to be an interesting time for Toronto's real estate market.
This article was contributed on Nov 10, 2023
