Never mind that the calendar says it’s 2020. A current of concern is coursing through Toronto real estate circles about whether the region’s housing market is heading straight back to 2017.

Downtown agents are reporting a surge in the bully bids and competing offers that some say are eerily reminiscent of the property fever that gripped the market in 2016 and early 2017, particularly in the condo sector.

The deeply unaffordable GTA isn’t back to the soaring price increases of 2016 and 2017 yet, but there are worrying signs, say industry experts and some bank economists.

If the dearth of listings lingers and sales keep rising as they did in the typically cooler months of December and January, the Toronto Regional Real Estate Board’s (TRREB) 10 per cent annual price growth forecast could look conservative. The picture will be clearer in the spring, says Jason Mercer, the board’s director of market analysis.

“Looking down the next 12 months, the best we can hope for is that we see the listings trend flat. That suggests to me that market conditions are remaining tight and set to get tighter,” he said.

It’s a scenario that raises broader questions of what, if any, policy tools are appropriate or available to governments if the housing market starts frothing again as it did in 2016 and 2017. Is it time for the GTA to reconcile itself to a housing supply shortage that has increasingly come to feel like a chronic condition?

It was entirely predictable that the last round of policy tools designed to douse the blazing housing market had only a temporary effect, said Sal Guatieri, director and senior economist at BMO Capital Markets.

“After a lull in the market, buyers just come back and prices start rising,” he said.

In March 2017, months of double-digit year-over-year price increases culminated in a 33 per cent gain. It brought the average cost of a house or condo in the Greater Toronto Area to $916,567, a $228,000 increase in a single year.

Then came the foreign buyers’ tax, part of the Ontario Fair Housing Policy, and the mortgage stress test that achieved the desired effect of dousing the blaze. Year over year prices fell 4.5 per cent between January 2017 and January 2018 from $770,745 to $736,783. A year after the March 2017 peak and March 2018, the average house price was down 15.5 per cent at $784,558.

But halfway through last year, the market began steadily climbing again. May 2019 saw a 3.6 per cent year over year rise and by December prices were up 11.9 per cent over the same month in 2018. In January, it was 12.3 per cent.

But that doesn’t mean it’s 2016 again — “at least not yet” — Guatieri said.

“We’re not even close to the frothiness we were seeing in 2016, early 2017,” he said.

That was a time of steeper and more sustained price escalation. Guatieri said he would be surprised to see a repeat of the galloping speculation that fuelled those prices given the GTA’s affordability challenge. But he understands the concern.

“Prices are rising faster than family incomes and that’s straining affordability once again, leaving the market at risk again in the event of a shock if interest rates went up or the unemployment rate went up ... not to say that we expect interest rates to go up materially or a recession.

“But you never know,” he said.

The fear is that people, who are already struggling to afford their homes, are too close to the edge to weather a job loss or an interest rate hike.

On Tuesday, the government made it a little easier for some people to get into the housing market by tweaking the mortgage stress test, making it slightly lower for insured loans. The Office of the Superintendent of Financial Institutions (OSFI), which regulates banks, is expected to extend a new weekly benchmark to uninsured mortgages this spring.

It’s a move that some believe will fuel prices, especially at the lower end of the market where condos are already in short supply.

Even before Tuesday’s announcement, Realosophy broker John Pasalis said he was concerned about buyer behaviour, which he sees as similar to 2016 and early 2017, particularly in the condo market. Condo prices appreciated 15 per cent last year.

“The number of condos available for sale in January was the lowest it’s been in 25 years. A lot of that is investors holding onto their units and that’s what makes the market a little bit different,” he said.

That puts homebuyers in a tough spot with “insane bidding wars for condos.”

“I sold a unit last week that was a record price for that building for that unit. The same unit two weeks ago sold for $565,000. We sold for ($600,000). Twenty-four hours later a unit six floors below us sold for $603,000,” Pasalis said.

“Everyone’s inching prices up,” he said.

“The fact that everybody as a whole can spend a little bit less does not mean investors aren’t going to buy and buyers aren’t going to get anxious again and start bidding up prices. They will and they are and I think that’s what we’re seeing now,” said Pasalis.

“You talk to most agents on the ground, almost everyone is comparing this to 2017. This is the mood, this is the psychology, this is how competitive it feels. This is how rapidly prices are rising and I think that is a concern,” he said.

At the same time, consumer bankruptcies are rising — up 9.5 per cent year over year in Canada last year, with Ontario seeing the steepest rise of 15.4 per cent.

Governments can’t do much to slow the housing market’s momentum except keep a lid on borrowing by maintaining the stress test that requires buyers to qualify for mortgages two per cent above the rate they are actually required to pay, he said.

Policies such as the vacant home tax in British Columbia and the foreign buyers’ tax don’t do much to curb demand because they affect people who already own homes. Although they’re coming late, Toronto’s short-term rental regulations should have some impact on people buying investment properties to rent them, Pasalis said.

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But the stress test doesn’t curb speculative buyers. Even if they’re collectively spending a little less than they were a couple of years ago, it won’t stop buyers from getting anxious and bidding up prices, he said.

“If people can get mortgages, you can’t stop people from buying homes,” Pasalis said.

Engel & Volkers broker Anita Springate-Renaud says the stress test will stem the fevered bidding of 2016 and 2017. She puts the recent spike in sales and prices at least partly down to a mild winter pre-empting the traditionally busier spring market.

She says she sees multiple offers, but believes buyers have learned from the last fever-pitch price climb.

“People are a little more savvy, they’re a little more cautious,” she said.

Springate-Renaud cites an Ajax home that recently drew eight offers. Listed for $649,000, it sold for $731,000.

“It’s still not a crazy markup. Not like in 2017 where things were going $200 or $300K over asking. Just stupid,” she said.

Lauren Haw, CEO and broker of record for Zoocasa, thinks the real estate board’s forecast of 10 per cent this year is probably conservative. But even though she sees bidding wars that are drawing dozens of offers, Haw says there are key differences this time.

In 2016 and 2017, the speculation that drove up detached house prices in York Region pulled up the average prices and sales activity for the GTA. It didn’t make any sense that York was the hot zone, she said. People value shorter commute times and access to downtown amenities so prices escalating in the core makes more sense.

“The big difference today is that it’s happening fairly evenly across all regions,” Haw said.

She said end-user buyers are also playing a bigger role than investors in the bidding wars she has seen.

“There’s just so much pent-up demand,” Haw said. “Just getting onto the property ladder is one of the most difficult tasks right now and so you find that price point is really hot.”

That prices keep climbing is all part of the overarching supply issue in the GTA, including the rental sector, say experts like TRREB’s Mercer. The region’s economic conditions are at least as favourable as they were in 2016 and the population is continuing to soar.

“We saw stronger than expected job numbers for January and we’re continuing to create jobs through different sectors. It attracts people around the world and younger people. From the perspective of young people, that can stoke the home ownership market and leads to stronger demand on the rental market,” he said.

BMO’s Guatieri agrees that supply, not demand, is the fundamental issue. Dampening demand is only a temporary fix, he said.

“Really the government needs to work on the supply side, whether that means reducing development charges, easing zoning restrictions, just accelerating building approvals so builders can meet that demand in a more ready fashion,” he said.

Just as buyers are at risk of an economic downturn, there is a difficulty if already low interest rates fall further, he said. If rates fall because the economy is weak and unemployment is rising, that would likely have a neutral impact on housing because a weaker economy and job losses would suppress demand.

“But if the Bank of Canada is cutting rates because the risks of a weaker economy are rising, yet the jobless rate stays low, then that could fan demand for housing and consequently price gains,” Guatieri said.