The higher mortgage rates triggered last year’s slowdown and sent home prices down by more than 20 per cent in some of the Toronto suburbs.Richard Buchan/The Canadian Press
Toronto’s housing market is showing signs that it is on the rebound, with sales jumping and home prices rising in March for the second consecutive month.
The volume of sales rose by 44 per cent from February to March and the home price index rose by 2.5 per cent to $1,118,500 over the same period, according to the Toronto Regional Real Estate Board. The home price index excludes the highest-priced homes and is industry’s preferred measure. It climbed 1.15 per cent from January to February.
“We appear to have reached a bottom where the sales and price trends have flattened over the last few months and are starting to show signs of growth on a monthly basis,” said the board’s chief market analyst, Jason Mercer.
The Bank of Canada announced in January that it would hold its key interest rate steady. That started to give prospective buyers confidence that borrowing costs would not rise.
Now that more buyers have resumed their search, competition is heating up again. That’s especially true for housing with relatively lower prices, such as condos, and in suburban areas such as the region of Durham to the east of the city.
“We are seeing the uptick in all aspects,” said Nicole Montgomery, realtor with Hinchey Homes Real Estate, which serves the Durham region.
Ms. Montgomery said more than 130 people came to one of her open houses over the past weekend. She said the last time she saw that level of interest was in June of last year.
Shawn Hinchey, the president of the brokerage, said the surge in showings is “definitely new behaviour” since the Bank of Canada launched its interest-rate hiking campaign early last year. The key interest rate is now 4.5 per cent compared with 0.25 per cent at the start of 2022.
The higher mortgage rates triggered last year’s slowdown and sent home prices down by more than 20 per cent in some of the Toronto suburbs. Compared with last March, the home price index for the Toronto region is down 16.2 per cent.
Currently, Mr. Hinchey said properties are drawing multiple offers. Although the bids are not going well over the list price as they did during the pandemic’s real estate frenzy, he expects that may change if more homeowners do not put their properties up for sale.
Across the Toronto region, the number of new listings climbed from February to March but is below this time a year ago. Many buyers have responded to the higher mortgage rates by looking for cheaper properties.
Simeon Papailias, senior partner with real estate brokerage REC Canada, said demand has risen for properties that are priced under $700,000. “We are seeing anything under $700,000 fly off the shelf,” he said.
It was a similar situation in Vancouver, the priciest market in the country.
Sales and new property listings increased from February to March but were below the 10-year average, according to the local board.
That fuelled competition among prospective buyers and sent prices higher. The home price index for the Vancouver region rose 1.8 per cent to $1,143,900 from February to March, with values for detached homes rising the most. Year over year, the home price index is down by 9.5 per cent.