Toronto real estate bubble grows 3.8%

CANADA - House sales are down across Canada, including Toronto where the average house prices continue to go up despite lagging sales. The average price of a home in Toronto is now just under $500,000 as of January 2012.

Sales are down in over half of Canada. One of the biggest declines are in Toronto and the GTA where sales are down 3% (including seasonal adjustments), according to January housing statistics released Wednesday by the Canadian Real Estate Board (CREA.)

New listings are also down a seasonally adjusted 4.3% across the GTA, resulting in very low inventory of new resale properties on the market.

The low inventory (shortage of supply) is helping to drive up the average house price in the GTA by 3.8%, increasing Toronto's real estate bubble. The average sale price in the GTA from December 2011 to January 2012 to $486,654, according to CREA.

It is estimated the average price in the GTA will reach $500,000 by July or August 2012. The average price only needs to go up an extra 2.8% for it to reach $500,000.

The average GTA home was worth about 8.5% more in January than over the same period a year ago, the statistics show.

Across Canada the average price of a Canadian home hit $348,178 in January, up 1.2% from a year earlier.