Buyers are spending more money on home purchases in several major Canadian cities, even as the COVID-19 pandemic causes layoffs and income reductions across the country. The Canada Mortgage and Housing Corp. said Thursday that home sales have shifted toward more expensive housing types in Vancouver, Toronto, Ottawa, and Montreal in recent months. Expensive homes are outselling modestly priced houses and condos. High unemployment among lower income workers, coupled with fewer immigrants, has diminished demand for more moderately priced homes. The higher income households are continuing to manage and cope with the pandemic, have kept their jobs and their salaries are increasing, so demand at the higher end of the market probably reflects this.

In Toronto, that translates into a growing price gap between detached homes and semi-detached properties and in some cases, dozens of competing offers are driving up house prices at a rate that is beginning to look worrisome. The number of homes that sold in Toronto in the $1 million to $1.25 million rose from 8.8% to 12.1% between March and October. In the meantime, average household savings rates rose from 2% at the end of 2019 to 27.5% in the second quarter of 2020.

This report comes a day after Bank of Canada governor Tiff Macklem suggested there were signs of “excess exuberance” in real estate, with people buying homes based on the belief that prices will continue to rise. But he said the market is not yet at the level of frenzy Toronto saw five years ago before governments stepped in with cooling policy measures. Governments looking for ways to slow down the market should wait and see if more listings come online in the spring to help lessen some of the competition in the market. With easing restrictions and vaccinations coming soon Sellers might be more comfortable listing their homes.