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Steve Chiotakis: The real-estate market here at home is still in the pits, but the story’s completely different north of the border. Home sales in Canada are soaring. And prices have reached an all-time high. Reporter Anita Elash has more from Toronto.
Anita Elash: Toronto’s real-estate market is so hot these days that buyers are lining up to get in.
Real-estate agent: Hello.
When this real-estate agent arrived for an open house, to show off a three-bedroom duplex, there were already six people waiting in line.
Sisters Rita and Anna Iozzo are willing to spend up to $500,000. Rita says they’ve been searching for two months, and still can’t find a house they can afford.
Rita Iozzo: We think it’s a pretty good chunk of money and, uh, even things in our price range look like fixer-uppers.
Economists say Canada’s housing market was never in as much trouble as the U.S. That’s because Canada has a conservative banking system. You need a much bigger down payment and higher income to buy a house here. So there weren’t a lot of defaults during the recession.
But one thing that did happen in Canada during the recession is that mortgage rates dropped to historic lows. They’re currently between 2 and 4.5 percent. And that has potential home buyers lining up.
Stefane Marion is a real-estate analyst with the National Bank.
STEFANE Marion: These are the best conditions in over 30 years for Canadian households that desire to buy a home.
But, those falling interest rates are driving up prices.
Adam Brown is a real estate agent who was standing in line at that downtown Toronto duplex. He says bidding wars are the new normal. And he expects this house will sell way above the asking price of four eighty-nine.
Adam Brown: It’s a seller’s market and sometimes sellers are getting greedy in this market.
Economist Stefane Marion says there’s one big risk in all this — that Canadians will buy themselves into a real-estate bubble. But, he says, Canada’s economy is showing signs of growth. So he and others expects the Bank of Canada to raise its benchmark interest rate before real estate prices get out of hand.
In Toronto, I’m Anita Elash for Marketplace.
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