Gwen  Layton

Gwen Layton

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Coldwell Banker - R.M.R. Real Estate, Brokerage*

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Two Real Estate Articles Posted Four Hours Apart - Glass Half-empty or Glass Half-full?!

Canada Home Price Index Posts Record Growth in April

Reporting by Julie Gordon in Ottawa; Editing by Chizu Nomiyama - Teranet - 05/18/2022

OTTAWA (Reuters) - Canadian home price growth accelerated again in April, with annual price gains breaking the record set last year, index data showed on Wednesday.

The National Bank Composite House Price Index, which tracks repeat sales of single-family homes in major Canadian markets, rose 2.7% in April, up from a 2.1% gain in March. The data is not seasonally adjusted.

On an annual basis, home prices gained 18.8%, smashing the previous record 18.4% set in August 2021 which it matched last month. Prices rose year-over-year in all 11 major markets, with Halifax, Nova Scotia and Hamilton, Ontario posting the strongest gains.

On a monthly basis, 10 of 11 major markets posted gains, led by Halifax and the Ottawa-Gatineau capital region. Prices in Edmonton, Alberta bucked the trend, declining 0.7% on the month.

Suburbs vs downtown: Toronto's mixed housing market may signal coming trend

By Julie Gordon and Nichola Saminather - 05/18/2022

The median home price in the greater Toronto area has slipped 8.9% in the last two months under the weight of back-to-back Bank of Canada rate hikes. This followed a 54.5% surge in two years to a record median home price of C$1.2 million ($930,160) in February.

The median home price in the greater Toronto area has slipped 8.9% in the last two months under the weight of back-to-back Bank of Canada rate hikes. This followed a 54.5% surge in two years to a record median home price of C$1.2 million ($930,160) in February.

Those pandemic gains propelled Toronto into the No. 2 spot on the UBS real estate bubble index. 

But the declines are masking the resilience of Toronto's core, where the median price has not fallen but rather climbed 5.2% from February to April. 

(Graphic-Home prices are falling fast in Toronto's suburbs: https://graphics.reuters.com/CANADA-POLITICS/HOUSING/lbvgndnzlpq/chart.png)

The rapid price declines in Toronto's suburbs and relative strength of the city core may be a preview of how a potential correction could play out across Canada. Smaller cities where prices jumped the most are at greater risk of steep declines than major urban centers like Montreal and Vancouver.

Prices in Toronto's core, which is dominated by condos, rose by a far more subdued margin than the city's suburbs during the pandemic, leaving the area less vulnerable to a correction. And, as the pandemic ebbs and companies call remote workers back to offices, many who moved are rethinking the wisdom of living further afield. 

"The core is doing significantly better than the suburban market," said Realosophy Realty President John Pasalis, adding that multiple offers are still common downtown.

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The Durham region and Simcoe County on Toronto's outskirts, where prices skyrocketed more than 85% during the pandemic as white-collar workers arrived in droves, have seen prices fall by 15% in two months. Active listings in the Toronto metropolitan area excluding the city's core have nearly quadrupled from the beginning of the year.

Some home buyers miss the convenience and lifestyle of living downtown.

"Their friends and their hangout spots aren't really in those suburban areas. So they're all trying to kind of migrate a little bit further down south again," said Tim Keung, chief executive of TimSold Real Estate, which specializes in Toronto's northern suburbs and beyond. 

That reverse migration has helped buoy demand for condominiums and higher-density homes in central Toronto. 

"I'm working with people who moved out of the city in 2020, and they now want to have a small condo in the city because their workplace that promised they can be remote forever is now saying, 'You have to be in the office two to three days a week,'" said Toronto realtor Lisa Bednarski at BSpoke Realty. 

To be sure, Toronto's core is slowing as well. The average days on market for a property edged up to 15 in April from 13 in February, with active listings up 69.9%. And the median price leveled off in April from March. 

"The demand fever in Canadian housing has broken," Robert Kavcic, senior economist at BMO Economics, said in a note. "Ontario markets are weakening most and fastest, especially further outside the core of Toronto."