March brings double increase of home sales in Toronto and leads to $1.1M average price

In March, Canada’s biggest real estate market showed one more month of record home sales and price increases. The head of the Toronto Regional Real Estate Board (TRREB) warns about possible undesirable consequences as Bay Street experts call for new measures.

According to TRREB, there were 15,652 homes sold in the GTA last month, marking a 97% gain from March 2020. The board says the sales in the second half of the month rose by 174% annually.

The average real estate price was up by 21.6% from a year earlier to $1,097,565 amid a lack of supply with active listings going down by 0.7%.

The strong market activity in the GTA was particularly noticeable outside of the City of Toronto. According to TRREB, the sales of detached homes rose by 111.6% annually in the 905 region, which includes Mississauga, Hamilton and Oakville. The average price for this real estate type in the area went up by 31.4%, marking the largest price growth for any of the major categories monitored by the board.

This report is one more reminder of the strong combination of low interest rates and the remote work tendency, which have pushed up the demand for larger properties among buyers, especially outside Canada’s largest cities.

Amid growing demand supporting prices gains, many experts have spoken out about the national economy. For instance, Rosenberg Research & Associates Inc. President David Rosenberg, who predicted the U.S. housing collapse leading to the 2008-09 financial crisis, says the Canadian housing represents “one of the biggest bubbles in history.”

In addition to it, RBC Senior Economist Robert Hogue believes policymakers should consider “all possible options, including even such unpopular measures as eliminating the principal residence exemption from capital gains tax.” 

Meanwhile, Scotiabank Senior Economist Jean-Francois Perrault and his team don’t share this opinion, stating such changes should not be even considered.

It coincides with TRREB’s outlook, in which the board’s CEO, John DiMichele, repeated that the solution is in increasing supply, and not in restraining demand.

“The current state of the housing market has caused new discussions on potential demand aimed measures,” – he said. “Policies focused on demand, e.g. a capital gains tax on primary residences, may have a short-term influence, but they can also bring undesirable consequences, for instance, further reducing of the supply.”