TORONTO -- A Toronto semi-detached home that drew 20 offers and sold for $575,000 above asking is a sign of the eye-popping prices that sellers are getting for homes in an overheated market.
But all those "sold over asking" signs that dot Toronto streets could be a sign of a market due for a price correction, according to the federal government’s housing agency.
"It was wild as we saw the offers were rolling in," selling realtor Anushki Bodhinayake told CTV News Toronto. "We knew it was a great house. We knew it was in a great neighbourhood. We didn't really think it would get this much attention."
The semi-detached home sold for $1.675 million, more than 50 per cent over its asking price.
And it's not the only one.
Buyers are in bidding wars all over the Greater Toronto Area, snapping up homes almost as soon as they hit the market.
A large number of buyers are chasing a small pool of homes being listed, said Jason Mercer, an analyst with the Toronto Real Estate Board.
"While listings are up they haven’t grown at the same rate as sales have," Mercer said. "Market conditions have tightened and you’re seeing more competition in buyers in the marketplace and that’s served to exert strong upward pressure on prices."
Toronto and Ottawa are joining Hamilton as cities which are highly vulnerable to instability, according to The Canadian Mortgage and Housing Corporation’s latest housing market assessment report.
"When you see that growth continuing or persisting over the long period that’s concerning," CMHC market analyst Dana Senagama said. "That tells us that the way it’s going is not sustainable."
Senagama said analysts have been taken aback by how the housing market has recovered quickly after a pandemic that threatened to keep prices down.
But she said rock-bottom interest rates, low supply of housing, population growth and the unequal effect of the COVID-19 pandemic on various income groups are factors that are increasing the price of homes.
"This is the K-shaped recovery. The folks who have money — nothing affected them. But for those who lost their jobs, the low-income category, they tend to rent and not own," she said, noting that vacancy rates are nearly double in Toronto compared to what they were the year before.
The country as a whole remains at moderate risk of a correction, the CMHC report said.
Montreal and Vancouver are also at moderate risk.
Prices have jumped some 30 per cent in a variety of cities across Ontario, as working from home makes it more possible for those with larger incomes to relocate to smaller towns.
Mercer said as the pandemic’s effects on the economy ease, immigration and housing demand could even pick up further.
"I see that as increasing the demand for housing as we move forward," he said.
Bodhinayake said she didn’t think the price gains could hold on forever.
"A correction has to happen at this point. It's just a matter of when. Right now the market is strong," she said.
