Bring your mind back to Toronto’s housing market heydays of 2016. It was a time when double-digit price increases seemed like they'd never end.
But soon after, a slew of new mortgage regulations and real estate taxes came into effect and those days did end.
The average Toronto sale price plummeted from $920,791 in April 2017 to $748,328 in January 2019. But fast-forward another year to January 2020, and the average price is now back up to $839,363.
Yogi Berra would call it déja-vu all over again.
That’s kind of what RBC senior economist Robert Hogue is calling it too. “It’s looking more and more like early-2016 all over again for the Toronto housing market,” he wrote in a recent report. “This is not a good sign. Those were the days when things started to heat up uncomfortably, propelling property values sky-high in the ensuing year.”
In January, Toronto experienced its largest month-over-month home price increase since October 2017, and on a year-over-year basis prices were up 12.3%.
The average selling price for a detached home in January was $1,038,247, up 10.5% year-over-year.
Condo prices, meanwhile, surged 15% to $630,047. Some of that is linked to the limiting mortgage stress test (which reduces maximum approval amounts) and default-insurance rules (like CMHC’s $1 million property value limit).
Even usually tepid housing markets on the east coast are experiencing some sizzle, in certain hotspots.
Take the island province of Prince Edward Island, for example. Price appreciation from 2018 to 2019 surpassed 16%, according to the Canadian Real Estate Board.
“Prince Edward Island is experiencing a housing boom as a result of leading the region (and the country overall last year) in population growth,” according to Don Mills, former owner of Corporate Research Associates and an expert in data trends.
He noted there are now more housing units being built on the island of PEI than Newfoundland and Labrador, “a province with more than three times the population, but a population in decline.”
“The P.E.I. economy has outperformed the rest of Atlantic Canada over the last decade or so, largely due to steadily increasing population growth,” Mills noted. “There can be no economic prosperity without population growth.”
Halifax, too, is experiencing a housing boom. Home prices in the province’s capital rose 11.1% from 2018 to 2019, according to CREA, again driven largely by steady population growth over the past three years.
"The advantage is in the hands of the sellers,” Matt Honsberger, president of the Nova Scotia Association of Realtors, told CTV News.
All of this begs the question…what form of cold water will the government attempt to throw on these red-hot housing markets next?
And will those that are under-performing—i.e. the Prairies and Newfoundland & Labrador—once again be unwitting victims of blanket, cross-country mortgage regulations?
Here’s a look at just some of the government policies recently introduced to cool down hot markets:
These are just some of a long list of mortgage regulations that have been introduced since 2008—there have been more than 60, in fact.
More could be added to the list if home prices continue setting records. But instead of pouring cold water on a fiery market with more regulation, the powers that be might be wise to limit what’s fuelling the fire in the first place.