New figures show that the real estate market in Toronto and its surrounding areas continues to climb rapidly, making it the hottest in North America. Toronto has enjoyed a housing boom for several years, with no end in sight. Now, communities outside the city are starting to feel the effects as Toronto buyers look farther afield for affordable housing.
"Housing is actually forecast to become a drag on growth in 2017, a modest one, but -.2 percentage points," said Stephen Poloz, the governor of the Bank of Canada.
Poloz acknowledges just how much of an effect housing prices in Toronto and Vancouver have had on the economy. Measures taken in Vancouver, such as a tax on foreign buyers, have cooled that market, leaving Toronto as the only hot spot.
Federal politicians in Ottawa have also taken notice, introducing new rules making it tougher for Canadians to buy real estate by increasing the amount needed for a down payment and to qualify for a mortgage.
Federal finance minister Bill Morneau's recent comments were directly aimed at the Toronto market.
"The overall indebtedness of Canadians across the country is a significant challenge and the continuing low interest rates create the opportunity for behaviors that may not be in the best interests of Canadians as they make investments," Morneau said.
The heated market in Toronto, where the average price of a detached home has topped $1 million, is sending many buyers farther out to places such as Hamilton, to the west, Barrie, to the north, and Port Hope and Cobourg, to the east.
"We're not having problems, whatsoever, of finding buyers for new builds," said Todd Palmers with Pratt Homes in Barrie.
"Right now, with the low interest rates in the market, with the lack of product out there, people are doing whatever they can to get into the real estate market," Palmers added.
The average prices the suburb communities of Toronto have jumped by 20 percent from a year ago and some analysts say while the government has focused on the high demand, what they should be looking at is a policy to address the lack of homes available for sale.
