Vancouver and Toronto prices go up even as sales go down

June 2nd, 2016  |  Canadian Business

Housing activity in the Toronto and Vancouver has seemed to reach its peak, but prices are still going up.

This might be the worst time to buy a home in Toronto or Vancouver. As the supply of single-family dwellings shrinks, the prices for them swell. People are being priced out, even those who are selling one home to move to another.

The Huffington Post reports that month-to-month sales activity in Toronto was only up 6.4% in May compared to 43.2% in April and 35.4% in March. In Vancouver, sales were down 0.3% in May after a 7.6% drop in April. Meanwhile people are looking to the surrounding areas to find more affordable housing within a reasonable commuting range. The increased sales in parts of the GTA and Metro Vancouver is good for business, at least until supply starts to run out there too.

The precarious housing situations in the two cities have more than one major bank concerned about the economic safety of the housing market. The CEOs of National Bank and Scotiabank both want the government to further tighten mortgage rules to slow down sales and diminish demand.

Of the few ways to slow the market down mortgage rules are the safest as raising interest rates could lead to a credit default disaster, just as an increase in unemployment would also negatively impact not just prospective buyers, but homeowners as well.