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Toronto’s mixed housing market may signal coming trend -Breaking

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© Reuters. FILE PHOTO – A row of houses stands in an East Gwillimbury subdivision, Ontario, Canada. January 30, 2018. REUTERS/Mark Blinch

Julie Gordon and Nichola Samanthainather

TORONTO (Reuters), Toronto’s home prices have fallen, but they are not falling everywhere.

Due to back-to-back rate increases by the Bank of Canada, the median Toronto home price has dropped 8.9% over the past two months. After a 52.5% increase in the median home price in the last two years, which reached a record C$1.2million ($930.160 in February), this was a significant drop.

Toronto climbed to the top of the UBS real estate bubble index with its pandemic gains. The UBS real-estate bubble index ranked Toronto at No. 2.

However, the drops are masking Toronto’s resilience in the core. The median price of Toronto has not declined but risen 5.2% between February and April.

(Graphic-Home prices are falling fast in Toronto’s suburbs: https://graphics.reuters.com/CANADA-POLITICS/HOUSING/lbvgndnzlpq/chart.png)

Toronto’s suburban price drops and relative strength in the core of Toronto may indicate how Canada could recover. The risk of sharp declines in smaller cities, where prices have soared the most is greater than for major urban centres like Montreal or Vancouver.

The condo-dominated core of Toronto saw prices rise by far less than in its suburbs. It is therefore more vulnerable to an area correction. Many people who have moved to reconsider the value of moving further away as the pandemic subsides.

Realosophy Realty President John Pasalis said, “The core does significantly better than that of the suburban market”, adding that there are many offers downtown.

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Prices have fallen 15% in the Simcoe County and Durham regions of Toronto, which were where they were higher than 85% in the wake of the Pandemic. This was because white-collar workers flooded in large numbers. Since the beginning of 2018, active listings outside the core Toronto area have almost quadrupled.

Many homebuyers miss living in the city.

They don’t live in these suburban areas, but their friends do. “So they are all trying to sort of migrate further south,” explained Tim Keung chief executive of TimSold Real Estate. The company specializes in Toronto’s northern suburban areas and beyond.

Reverse migration has helped boost demand for condominiums in Toronto and other higher-density properties.

Lisa Bednarski of BSpoke Realty in Toronto said, “I work with people who left the city in 2020. They now wish to own a small condo here because the workplace that promised remote working for them is saying they have to be present two to three times a week.”

Toronto’s core is, undoubtedly, slowing down. With active listings increasing by 69.9%, the average time a property is on the market increased to 15 from 13 in February. The median price also remained the same in April as it was in March.

Robert Kavcic from BMO Economics stated that the “demand fever” in Canadian housing had ended in a memo. “Ontario market are weakening fastest and most severely, especially outside of the core Toronto.”

($1 = 1.2901 Canadian dollars)

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