Toronto Home Sellers Vanish as BMO Warns of Housing BubbleBy and
Sales to new listings in Toronto rise to record 94% in January
BMO economist Porter says Toronto housing market in bubble
Conventional wisdom suggests that when prices soar for something, so does its supply -- except when you are talking about Toronto’s housing market.
Real estate in Canada’s biggest city has become so expensive that potential home sellers are pulling out of the market altogether, possibly since they have nowhere cheaper to move to as the housing boom expands into Toronto’s suburbs and neighboring towns.
New listings in Toronto fell 17 percent in January from a month earlier, adjusted for seasonality, the biggest one-month decline since 2002. Sales as a share of new listings -- a gauge of how demand compares with supply -- rose to a record 94 percent.
“The shortage of homes available for sale has become more severe in some cities,” Gregory Klump, the Canadian Real Estate Association’s chief economist, said Wednesday in a statement. “Unless sales activity drops dramatically, the outlook for home prices remains strong in places that face a continuing supply shortage.”
Listings are shrinking even as prices in Toronto have been soaring to levels Bank of Montreal Chief Economist Doug Porter is calling a “bubble”. The average price for what is considered a “benchmark” home in Toronto is up 22.6 percent from a year earlier, the country’s real estate association reported Wednesday.
The housing boom in Toronto has also lifted prices for neighboring areas like Oakville-Milton, which has seen benchmark prices rise 26 percent over the past year.
“The Toronto housing market —- and the many cities surrounding it —- are in a housing bubble,” Porter said in a note to investors, where he added that he believes the main culprit is demand not supply. “Toronto and any city that is remotely within commuting distance are overheating, and perhaps dangerously so.”