Bank of Canada doesn’t have the tools to cool just the housing market: Economist
Toronto’s condo market, battered by a pandemic that sent city residents looking for more space, is bouncing back.
The number of condominiums sold in the Toronto metropolitan area surged 80 per cent in the first quarter compared with a year earlier, while new leases for rentals also jumped, according to a report from the Toronto Regional Real Estate Board.
The number of units put up for sale, meanwhile, gained just 43 per cent. That was a noticeable slowdown after condos flooded the market with the pandemic driving a shift in housing preference away from downtown and toward larger properties in the suburbs.
“Many realtors have noted a marked increase in condo interest since the beginning of 2021,” Lisa Patel, president of the Toronto Regional Real Estate Board, said in a statement. “This interest will likely continue to increase as the economy improves and vaccine take-up accelerates, resulting in more confidence for first-time buyers.”
Canada’s housing market has been booming, with more properties changing hands in March than any month in history. As in the U.S., buyers who have been working from home for months are looking outside major cities for larger properties.
The preference for ground-level homes offering more space for remote work and backyards for recreation has put pressure on the condo market in Canada’s financial capital. A near-halt to the immigration that drives Canadian population growth also depressed demand.
That has left plenty of available properties to purchase and rent. The data released Thursday show that the number of units leased in the first quarter rose about 82 per cent, while new rental listings increased 79 per cent. That’s a reversal from the previous quarter when growth in new listings in the resale and rental markets far outpaced sales and new leases.
Buyers and renters appear to be taking advantage of discounts. The average selling price was down 1.4 per cent from a year ago to about $645,000 (US$516,000), the data show. Rent for a one-bedroom unit declined 17 per cent to $1,820 a month, while a two-bedroom fell 13 per cent to $2,447.
“Supply and therefore choice for renters remained very high from a historic perspective,” Jason Mercer, the board’s chief market analyst, said in a statement. “However, if growth in rental transactions continues to outstrip growth in listings, market conditions will become tighter as we move through 2021 and even more so in 2022 as immigration and non-permanent migration rebound.”