By all accounts, the Toronto market’s exceptional performance remains the main contributor of strength to the national housing sector, but a local real estate professional is more cautious of where these continuous increases in demand and home prices will lead to.
A noteworthy example of this outsized growth is a three-bedroom semi-detached home on Palmerston Ave., which got listed on the market for $1.375 million earlier this week. The property was purchased in December 2014 for just $851,750—fully over half a million dollars less than its current price, and representing a sharp 62 per cent appreciation in just 2 short years.
Realosophy president and broker John Pasalis noted that the listed value of the Palmerston home would have purchased a larger and more spacious house as recently as last summer.
“If this is getting $1.4 million what does that mean for anyone who wants to buy in this neighbourhood?” Pasalis mused in a Toronto Star
report. “When you see appreciations of 30 per cent a year it generally doesn’t end well. That’s a concerning thing.”
And at the rate it’s going, Toronto’s price growth might not grind to a halt in the foreseeable future.
“My instinct is that Toronto’s going to keep going like this until there’s some outside policy decision,” Pasalis stated.
One policy intervention that has proven effective in another hot market was the 15 per cent tax slapped by the B.C. government on foreign buyers in mid-2016. Since then, Vancouver price growth has seen a significant cooling down from its prior rate of over 20 per cent a year.
However, such a measure in Ontario would only have a limited impact at present, considering that less than 10 per cent of real estate investors in Toronto are foreign nationals.
“The numbers are still in the mid single-digits from what we can tell. The foreign demand we have is more from immigration, people that are choosing to raise their families in Toronto,” Re/MAX Hallmark Realty managing partner Gurinder Sandhu said.
“There’s political certainty, there’s economic certainty and, when you look at all the uncertainty around the world, all of a sudden Toronto becomes that much more in demand.”
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