Toronto real estate faces significant slowdown, CMHC says

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High-priced cities make housing market across Canada vulnerable, Crown agency says


According to the Canada Mortgage and Housing Corporation (CMHC), the real estate market in the Greater Toronto Area, where a two-bedroom bungalow in need of renovation is listed at $ 2 million, remains very vulnerable.

Accelerating and overvaluing prices, as house prices continue to rise above income levels, leaves the entire real estate market in Canada, according to CMHC’s latest housing market assessment to a high degree of vulnerability. This means that Canadian real estate is poised for a major downturn with big consequences. And it is primarily Ontario’s vibrant real estate markets, such as Toronto and Eastern Canada, that are driving the entire country to the current high level of vulnerability.

Toronto, Hamilton, Ottawa, Halifax and Moncton have all been very vulnerable to the market for some time. They are now joined by Montreal, which recently went from moderate to high, with prices rising sharply. Vancouver, on the other hand, has gone from a moderate to low degree of market vulnerability.

“Exceptionally strong demand and home price appreciation during the pandemic may have helped raise expectations of continued price growth for homebuyers in several local housing markets in Ontario and the East.” of Canada, ”said Bob Dugan, CMHC’s chief economist, in a statement. “This, in turn, may have caused more buyers to enter the market than was warranted.”

Home sales hit all-time highs in 2021, according to CMHC, but there was little evidence of excess inventory, meaning little vacancy among newly built and unsold housing units or rental apartments. Real estate sales in Toronto may be slowing down, but demand still exceeds supply and prices continue to rise at an accelerating pace over the extended period.

Properties like the two-bedroom bungalow at 374 Joicey indicate where things stand, with sellers remaining confident they can get a ridiculously high price for many buyers looking to create more supply.

The property near Bathurst and the 401 with its dated kitchen and rugs is habitable. But the list invites builders or investors to tear it down and create one or two custom homes (the land is large enough to be separated). The listing price of $ 1,999,988 is actually a drop from the $ 2,295,000 it was set earlier this year, which itself was down from the $ 2,475,000 it had. enrolled at the end of last year. Yet the listing price is still much higher than the average selling price of $ 1.7 million for a single-family home in the city of Toronto.

According to CMHC, although the Toronto real estate market is highly vulnerable due to overheating and accelerating prices, there is little evidence of overvaluation. High prices in Toronto are not far removed from the fundamentals of the city’s housing market, such as income, population and interest rates.

And according to CMHC, it’s the Toronto suburbs that are really feeling the heat. The sales-to-new listings ratio (SNLR) in the city where the supply of condominiums is abundant is 64%. Meanwhile, more people working from home and looking for more space pushed the SNLR much higher in Durham (86 percent), Halton (86 percent) and Peel (81 percent).

The exodus from Toronto keeps real estate overheating in Halifax and Moncton. CMHC cites population growth due to high interprovincial migration as one of the factors explaining that their local dwellings are overvalued and have a high degree of vulnerability.

@justsayrad



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