As the most-populated city in all of Canada, Toronto home prices are unsurprisingly rising, particularly in light of the meager inventory situation that's leaving the current market as one that favors sellers.
But the 416 isn't the only area code in Ontario where home prices are climbing - it's a trend apparent throughout the province, according to newly released data from Royal LePage.
Between April and June, the typical residence in Ottawa was approximately $432,864, the real estate brokerage firm reported. That's more than 8 percent higher than the same three-month period in 2016.
That's among all housing types in Canada's capital city. For specific domiciles - like two-story homes - the median was roughly $460,300 during the second quarter, based on Royal LePage's figures, up almost 10.5 percent from a year earlier. Condominiums cost less at a median of $327,956, but here as well, they commanded more in the second quarter of this year than last year - almost 4 percent more.
Hamilton property prices up sharply
To avoid the hustle and bustle of the Toronto, hopeful home buyers often turn to suburbia, such as in Hamilton, a thriving metropolis that's large but not as sizeable as Toronto. But here also, home prices have skyrocketed. During the second quarter, the median cost of a home up for sale jumped 20 percent on a year-over-year basis, totaling $483,719, according to Royal LePage. Similar to Ottawa, prices increases were even greater for specific housing types, topping $508,450 for a two-story residence - a 21 percent increase versus the second quarter in 2016.
Hanna Browne, a broker at Royal LePage, noted how other parts of the country are experiencing conditions that are quite similar to what's happening in Toronto.
"Inventory levels across Ottawa [and Hamilton] have radically changed of late, reaching three-year lows and dropping by more than 20 percent when compared to the same time last year," Browne explained. "In recent months, we have a seen a Toronto-like effect with many buyers and not enough listings to go around. This dynamic is putting a lot of pressure on the region's home prices, in what is now decidedly a seller's market."
The Ontario government, for its part, is trying to even out the market so there's a better degree of balance. In April, the Office of the Premier announced a 15 percent tax for non-Canadian citizens looking to buy, specifically among homes for sale in the Greater Golden Horseshoe, located in Hamilton. The idea behind the tax is to increase revenue so more financial resources can be put toward construction and development, as the sales-to-new listings ratio favors sellers more so than it does buyers.
Sales-to-new-listings ratio starting to shift
For years, buyers have outnumbered properties, not only in Ontario but also at the national level. Conditions appear to be normalizing, though, albeit slowly. In the Canadian Real Estate Association's latest sales-to-new listings analysis, the ratio stood at 52.8 percent in June, which is squarely within balanced territory. Only three months ago, however, the number was well above 60 percent, indicative of sellers' market conditions.
Gregory Klump, CREA's chief economist, said that the government's proactive measures are taking root.
"Changes to Ontario housing policy made in late April have clearly prompted many homebuyers in the Greater Golden Horseshoe region to take a step back and assess how the housing market absorbs the changes," Klump said in a statement. "The recent increase in interest rates could reinforce a lack of urgency to purchase or, alternatively, move some buyers off the sidelines before their pre-approved mortgage rate expires."
For the first time since 2010, the Bank of Canada raised short-term interest rates, putting the new benchmark at 0.75 percent from its previous 0.50 percent. The Bank chalked up its decision to raise rates due to the improving economy, evidenced by increased job growth, lowered unemployment and enhanced productivity at the gross domestic product level.
It's unclear the extent to which home price increases will soften in the years ahead, but as far as this year is concerned, it will likely be more of the same, Royal LePage's Soper advised. At the national aggregate level, the real estate firm expects home prices to increase another 9.5 percent, potentially putting the typical listing at more than $617,750 come December.