The Toronto housing market’s consistent strength is most apparent in a noteworthy listing that went up last week: a three-bedroom semi-detached home in the downtown area with an asking price of $1.375 million—and was purchased in December 2014 for just $851,750.
This represented a sharp 62 per cent appreciation in just 2 short years, and a real estate professional expressed anxiety over where these continuous price increases will lead to.
Realosophy president and broker John Pasalis noted that the listed value of the Palmerston home would have purchased a larger and more spacious house as recently as last summer.
“If this is getting $1.4 million what does that mean for anyone who wants to buy in this neighbourhood?” Pasalis mused in a Toronto Star report. “When you see appreciations of 30 per cent a year it generally doesn’t end well. That’s a concerning thing.”
And at the rate it’s going, Toronto’s price growth might not grind to a halt in the foreseeable future.
“My instinct is that Toronto’s going to keep going like this until there’s some outside policy decision,” Pasalis stated.
One policy intervention that has proven effective in another hot market was the 15 per cent tax slapped by the B.C. government on foreign buyers in mid-2016. Since then, Vancouver price growth has seen a significant cooling down from its prior rate of over 20 per cent a year.
However, such a measure in Ontario would only have a limited impact at present, considering that less than 10 per cent of real estate investors in Toronto are foreign nationals.
“The numbers are still in the mid single-digits from what we can tell. The foreign demand we have is more from immigration, people that are choosing to raise their families in Toronto,” Re/MAX Hallmark Realty managing partner Gurinder Sandhu said.
“There’s political certainty, there’s economic certainty and, when you look at all the uncertainty around the world, all of a sudden Toronto becomes that much more in demand,” Sandhu added, alluding to the widespread tensions that have arisen after Donald Trump’s victory in the November 2016 U.S. presidential polls.