Video: Jason Mercer of the Toronto Real Estate Board discusses the factors that led to high housing prices in Toronto
Sales and prices continued to strengthen in the country’s biggest and priciest housing markets in November, rebounding sharply off lows seen amid a lull late last year.
The number of homes trading hands in the greater Toronto and Vancouver areas – sources of concern among some market watchers over the possible formation of a bubble – were up 13.9 per cent and 37.7 per cent respectively last month.
The average price across all housing types meanwhile climbed 1.0 per cent in the Vancouver area, to $603,000, and 11.3 per cent in the GTA, to $538,881 in November, according to the MLS Home Price Index.
In Calgary, sales were up 19 per cent compared to a year earlier, while the benchmark average price rose 8.5 per cent to $470,600, the city’s local real estate board said in a release. In Edmonton, the most affordable major city in the country, sales climbed 10.5 per cent year over year last month. The average price rose 2.8 per cent $346,388.
The gains build on the steady momentum seen in the housing market through most of the year. Experts say a major driver is the threat of higher interests next year pulling buyers into the market now.
The jump in prices in some markets is also playing a role.
“Many first-time homebuyers appear to be moving now to get ahead of any further increases in home prices, rent hikes, or an increase in lending rates,” Calgary Real Estate Board president Becky Walters said on Monday.
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Federal Finance Minister Jim Flaherty said last month sky-high consumer debt levels combined with a potentially overheated housing market were risks to the country’s economy he was keeping a close eye on.
Still, the Bank of Canada said Wednesday it doesn’t see a market place barreling toward a sharp correction, reiterating its view that the sector is gliding toward a soft landing.
“The housing sector has been stronger than expected but is consistent with updated demographic data and a pulling forward of home purchases in light of favourable financing conditions,” the central bank said in a statement. “The bank continues to expect a soft landing.”
The statement accompanied the BoC’s decision to hold its benchmark interest rate at 1.0 per cent.
The bank did caution however that high debt levels among consumers haven’t diminished at all.
“The risks associated with elevated household imbalances have not materially changed,” the bank said.