Canada's Condominium Magazine
The strong Canadian economy pressured the Bank of Canada to raise its benchmark interest rate a quarter of a percentage point to 1 percent Wednesday. This is a good news/bad new story. The nudge upwards came on continued indications of a strong economy and good jobs outlook. The rise is unlikely to put much pressure on the economy or markets due to strong employment outlooks.
“Recent reports suggest that economic conditions remain strong in the GTA, said TREB President Tim Syrianos. “Positive economic news coupled with the slower pace of price growth we are now experiencing could prompt an improvement in the demand for ownership housing, over and above the regular seasonal bump, as we move through the fall.”
Meanwhile, TREB released its August MLS resales and pricing data, which indicated prices up and sales down year-over-year.
August Resale Numbers
TREB reported August numbers, which showed sales (year-over-year) are down significantly, but prices are up in most types. Only detached homes were flat, with an overall average increase of only 0.3% versus condominiums, which increased 21.4% year-over-year.
The average prices in August 2017 came in at:
- Detached $968,494, a 0.3% increase year over year
- Semi-detached $714,167, a 12.1% increase year over year
- Townhouse $604,618, an 8.9% increase year over year
- Condo apartment $507,841, a 21.4% increase year over year.
During the same August period, however, resales again declined as the “wait and see” buyer pause continued. In August:
- 2,578 Detached homes sold, down 41.6% year over year
- 588 Semi-detached homes sold, down 31.3% year over year
- 1,090 Townhouses sold, down 27.5% year over year
- 1,996 Condo apartments sold, down 28% year over year
The MLS Home Price Index composite benchmark was up by 14.3% year-over-year.
“The relationship between sales and listings in the marketplace today suggests a balanced market,” said Jason Mercer, TREB’s Director of Market Analysis. “If current conditions are sustained over the coming months, we would expect to see year-over-year price growth normalize slightly above the rate of inflation. However, if some buyers move from the sidelines back into the marketplace, as TREB consumer research suggests may happen, an acceleration in price growth could result if listings remain at current levels.”
The bank rate increase is an expected outcome of strong RGP growth, low unemployment and inflation. These same factors make it likely the autumn will evolve into a stable, balanced real estate market. Current indicators:
- Q2 Real GDP growth 2017 UP 4.5%
- Toronto’s employment growth UP 1.3%
- Toronto’s unemployment rate in July 6.9%
- Inflation Rate in July year-over-year increase 1.2%
- Bank of Canada Rate now 1%, up from 0.75%
Summary of August