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Toronto Market Update – October 2021

Toronto Market Update – October 2021

Inventory is so low… and I feel like I’m starting to sound like a broken record, but that’s what we’re dealing with right now, very low inventory! Here at SO&Co we think that inventory will remain low… well at least for the time being. Since there isn’t enough supply, the demand is high, which is the result of homes going for a lot. September is usually a busy time for the housing market, and this past September was no exception, we saw an increase in sales compared to August and September 2021, which marked the third highest September on record. The prices for this past September were up month-over-month as well as year-over-year, with average home prices sitting at $1.13m compared to last year whereon average houses were going for $960k. 

How will the government help with the housing crisis? 

During the past election we heard multiple parties say the housing market is too expensive and it needed to be fixed. There were promises made to increase housing supply across the board, and make housing more affordable. The Liberals have proposed to invest $4 billion in a Housing Accelerator Fund which will help the housing supply in the largest cities grow every year, their target goal is to create 100,000 new middle class homes by 2024/2025. The idea behind this is to speed up the application process and get approvals faster so that builders are able to build homes quicker. They’re also proposing to help municipalities find vacant lands that aren’t being utilized and enforcing a “use it or lose it” policy, which will allow them to convert the vacant or unused lands into housing. There are many proposals the Liberals are making in order to make housing more affordable and accessible, in hopes to help out with the housing crisis in major cities across Canada. With the potential demand of immigration, this makes us wonder if this is truly achievable?  

Are we entering high risk territory?

The Canadian Mortgage and Housing Corporation feels the Canadian market is in high risk territory, the national risk level went from moderate to high. Last year CMHC released a report at the beginning of the pandemic (May 2020) stating prices could fall between 9 and 19% from pre-COVID levels, however prices surged as much as 30% throughout most of the country. So  does that mean that the CMHC was off? Honestly they probably weren’t that off, because the government intervened and helped, by producing lower interest rates, giving out loans to small businesses, and providing mortgage holidays from banks. Would we be foolish to be weary of this? I mean look at the lack of supply in the major markets in Canada, along with the potential for an increase in demand of immigration. It’s hard to see a shock to prices and see it happen again without the government intervening in the short term. 

What do you think needs to happen to help the Canadian housing market to stray away from the high risk territory? 

Have any questions about what this means for you, or just want to talk real estate? Reach out today. We’d love to hear from you.

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