OPINION: Just like it did the prior month, Vancouver drove the Composite index in January – without Vancouver, the Composite index would have retreated for a fifth month in a row (top chart). On a y/y basis, Vancouver’s index for condos surged 23.0%, while the index for other types of dwellings rose 13.5%. The fact is that Vancouver’s home resale market remained tight even after the introduction of a tax on acquisitions by foreigners (middle chart). The same cannot be said of Toronto, where the market turned from tight to balanced after the introduction of a similar tax last April. Toronto’s index was nevertheless up in January for the first time in six months, after the unsmoothed index (see note on methodology on next page) rose for a third month in a row (bottom chart). This firming of home prices in Toronto might reflect a rush to buy with pre-approved mortgages granted before more stringent rules on qualification for an uninsured mortgages were applied starting January 1st. With further increases in mortgage rates still to come (according to CMHC, posted 5y rates were at 4.14% in January against a low of 3.59% last May), it is premature to conclude that home prices have definitely turned the corner in Toronto.

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