Average Toronto home price hits $800,000

Even this junk will sell for half a million in Toronto … Not Kidding. Again, thanks Stephen Harper.

Home sales may be tanking across much of the country, but the price of coveted detached homes in the City of Toronto continues to soar, with the average cost exceeding $800,000 for the first time.

The price of the average detached home was up 17 per cent in mid September over the same time last year, hitting $805,308, according to midmonth figures from the Toronto Real Estate Board.

The increases are blamed on the fact there are fewer detached homes for sales than historic norms but unrelenting demand. TREB has blamed this phenomenon on moving costs — including Toronto’s unique land transfer tax — which have made moving so prohibitively expensive that homeowners are opting to hang on to their places and do renovations instead.

The average price of a detached home in the suburbs was $563,739 as of mid September, a relatively small jump of 6 per cent year over year.

Highrise condos prices were up 5 per cent in the 416 region to $352,851 in mid September over September, 2011, TREB’s figures show, while condo prices dropped 2 per cent in the 905 regions over the last year to $287,467.

The average price of a GTA house, which includes detached, semis, townhouses and row houses, was $496,786 in mid September, up 9.5 per cent from mid September of 2011.

The number of homes sold, however, was a completely different story thanks to stricter mortgage lending rules, which were cited this week in the 5.8 per cent drop in sales right across the country.

The number of residential property transactions across the GTA was down 15 per cent in mid September compared to the same period in 2011, with 2,544 transactions instead of the 2,995 recorded during the same period in 2011, said TREB.

Vancouver remains the least affordable city to buy a house in Canada while home ownership in Toronto is becoming more difficult, Royal Bank of Canada Economics Research said.

The costs of owning a detached bungalow in Vancouver take up 82.3 percent of a typical household’s income, up 0.1 percentage points from the previous quarter. In Toronto, the largest city in Canada, that figure is 53.8 percent, up 0.8 points, according to a housing affordability report for the first quarter produced by Canada’s largest lender.

“The Canadian housing market cooled significantly in the past year,” Craig Wright, chief economist at Royal Bank of Canada, said in a statement. “There is mounting evidence that activity is no longer weakening.”

A “significant nationwide price correction” isn’t imminent as long as affordability stays within the current range, Wright said.

Exceptionally low mortgage rates have been the chief factor in keeping homeownership costs relatively affordable, RBC said.

Finance Minister Jim Flaherty tightened mortgage rules four times in the last five years amid concern that overbuilding in some markets could lead to a sharp drop in prices. The Bank of Canada forecasts housing investment will be a drag on economic growth this year and next.

“While affordability levels are manageable at this point, we’d be humming a very different tune if interest rates were to suddenly rise substantially,” Wright said. “Fortunately, the likelihood of a surge in rates is slim at this stage.”

Across Canada, the costs of owning a standard two-story home take up 48 percent of a typical household’s monthly pretax income, while condominiums eat up 28.1 percent, according to the index. Both figures are unchanged from the previous quarter.

The RBC housing affordability index, compiled since 1985, measures how much of pretax household income is needed to own a home, including mortgage payments, utilities and property taxes. A rise in the measure shows a deterioration in affordability.