Toronto prices set another all-time high in November, with the average price increasing to $776,684, a whopping 23% above last November. The trend was consistent across all GTA regions and all home types; for example, condo apartment prices were up 15% over last year. It seems only yesterday that there was a glut of condo inventory and much talk of an imminent correction in condo prices…
While sales were lower than in October (a normal seasonal decline) they were 17% ahead of last year. At the same time, active listings were 36% below last year. As a result the inventory level (sales/active listings) dropped yet again, to just under one month’s supply. This is not just a very strong sellers’ market, it’s an extreme shortage of homes for sale. No wonder prices keep accelerating upward.
The recent changes in mortgage rules on October 17 (high ratio mortgages) and November 30 (conventional insured mortgages) is likely to hamper the market to some degree, as they will make it more difficult for many buyers to qualify for a mortgage. In fact it may be that the surge we have seen in October and November is largely because of buyers wanting to lock in before the rule changes take effect. The market normally slows during December and January, so it will be difficult to gauge the impact of the changes until the market picks up again in February. Because there is such a huge imbalance between buyers and sellers, it’s possible that the effect will turn out to be quite small.
Sooner or later, our market will have to change, as the current pace is clearly unsustainable in a weak economy with interest rates beginning to rise. The question, of course (to quote Billy Joel) is: Who knows how much further we’ll go on? Maybe we’ll find out next year.
