Average Price of Toronto Detached Home Hits $1 Million Milestone
Despite warnings that the Toronto housing market is overvalued, it’s showing no signs of letting up. February was a historic month for the Toronto housing market. The average price of a detached home in Toronto surpassed the $1 million milestone. Detached home sales were up a sizzling 16.9 percent in February, year over year.
This isn’t the first time the average price of a Toronto home has reached $1 million. The average sale price briefly reached the $1 million plateau in April 2014, before falling to $965,670 at month’s end.
Despite the record low temperatures seen in February, home sales were red hot. The average price for all housing types – condos, homes and townhouses – in the GTA was up 7.8 percent. This helped boost the average sales price to $596,193, according to the latest numbers from the Toronto Real Estate Board (TREB).
Single-family detached homes are in high demand in Toronto proper. Sellers continue to call the shots, with bidding wars a regular occurrence. And all this happened in February, the coldest month in Toronto history. With the spring market still a few weeks away, most expect even better numbers come April.
Cheap Credit Fueling Toronto Housing Market
In spite of warnings from the Bank of Canada that consumers are carrying too much debt, consumer debt is on the rise. The Household debt-to-income ratio hit a new high; it’s currently sitting at a record high of 163 percent. Meanwhile, consumers debt rose by 7.7 percent in 2014, according to Equifax.
Record low borrowing costs are encouraging Canadians to take on even more debt. When the Bank of Canada lowered the overnight lending rate to 0.75 percent from 1 percent, the banks soon followed suit by lowering prime rate to 2.85 percent from 3 percent. Lower mortgages rates are helping fuel the Toronto housing market, sending home prices into the stratosphere. With borrowing costs to remain low for the foreseeable future, the Toronto housing market isn’t showing any signs of letting up.
What $1 Million Used to Buy in Toronto
$1 million used to buy a mansion in Toronto – how times have changed. Today you’ll be lucky to find a bungalow for under $1 million in Toronto’s most sought-after neighbourhoods like Rosedale. The Toronto Star did an interesting article on how much real estate prices have shot up in Toronto.
For example, you used to be able to buy a two-storey detached home in Bridle Path-Sunnybrook-York Mill for $1 million. When you spent a $1 million back then, you got five bedrooms, state-of-the-art appliances, and a spacious 50 by 150-foot lot. Fast forward to today and the lot alone is worth over $1 million. Add a brand-new custom-built home and the property can easily be worth four times as much.
If you’re in the housing market this spring, it’s important to remember you need a 20 percent down payment if you’re buying a home over $1 million. CMHC will not offer mortgage insurance on high-ratio mortgages for homes valued over $1 million.