The Toronto Real Estate Board (TREB) released its monthly resale housing report for June 2017, along with a forecast update for 2017, and the results of two new Ipsos surveys. The one takeaway we have is that the Fair Housing Plan has made a strong impact on consumer activity.
June 2017 resale housing market
In June 2017, there were 7,974 sales reported through the MLS in the Greater Toronto Area (GTA), which is 37.3% lower than the same period last year. While sales were down, listings were up year-over-year, nearly 16%, hitting 19,614. This is a large increase in listings, but is considered moderate compared to May 2017’s 48.9% increase.
The average selling price in June was $793,915, up 6.3% from last year. The year-to-date average selling price for the first six months of the year was $870,016, which is 20.9% higher than the same period in 2016.
“We are in a period of flux that often follows major government policy announcements pointed at the housing market,” says the new TREB President, Tim Syrianos. “On one hand, consumer survey results tell us many households are very interested in purchasing a home in the near future, but some of these would-be buyers seem to be temporarily on the sidelines waiting to see the real impact of the Ontario Fair Housing Plan. On the other hand, we have existing homeowners who are listing their home because they feel price growth may have peaked. The end result has been a better supplied market and a moderating annual pace of price growth.”
Buyer and seller activity impacted by Fair Housing Plan
TREB commissioned two new Ipsos surveys, one measuring the intentions of home buyers and the other of home sellers. The survey was conducted from May 23 to 29, 2017.
“The recent Ipsos survey results suggest that homebuying activity in the GTA will remain strong moving forward,” says Jason Mercer, TREB’s Director of Market Analysis and Service Channels. “The year-over-year dip in home sales we have experienced over the last two months seem to be the result of would-be buyers putting their decision to purchase temporarily on hold while they monitor the impact of the Fair Housing Plan. On the supply side of the market, it certainly looks as though buyers will benefit from more choice in the second half of 2017 compared to the same period in 2016.”
Among the sellers, 30% of households were likely or somewhat likely to list their home over the next year. 15% of the likely listers said that the Fair Housing Plan was the primary reason they would list. Nearly 80% of the likely listers said they plan to purchase another home.
For the buyers, 35% were very likely or likely to buy a home over the next year. 40% of the likely buyers would be first-time buyers, which is much lower than the 53% TREB reported in fall 2016. 10% of the households who would not buy said that the Fair Housing Plan is a key or contributing factor.
Based on the sales and listings figures in the GTA resale market, and the results of TREB’s two recent consumer activity surveys, it looks like many are taking a “wait and see” approach with the Fair Housing Plan, like Ben Myers, Senior VP, Market Research & Analytics, Fortress Real Developments, suggested recently, regarding the foreign buyers tax and new home market.
“The Ontario government recently released their first wave of foreign buyer statistics, which confirmed earlier TREB research that showed foreign buyers, even in the pre-Fair Housing Plan era, represented a very small proportion of overall home purchases – slightly less than 5%,” says TREB CEO John DiMichele. “This, taken along with the strong buyer intentions reported by Ipsos, suggests that we will see many households moving back into the homeownership market over the next 12 months.”
TREB says that the probability of higher borrowing costs has increased, with the Bank of Canada expected to increase its Target for the Overnight Rate at least once in the next six months.
Forecasted total sales for the year have been adjusted downward to somewhere between 89,000 and 100,000, while total expected listings have increased to somewhere between 175,000 and 190,000.
“It remains to be seen whether the level of inventory will hold up to accommodate the eventual resurgence in demand,” adds DiMichele. “The Fair Housing Plan was less precise as it related to long term housing supply issues. Moving forward, TREB looks forward to working with the Ontario government in the development of effective, evidence-based policies pointed at the housing market.”
The growth rate of the average selling price for the year is forecasted to range from 13% to 18%. Overall, we should see a more balanced market in the second half of 2017, compared to what we experienced in the first few months of the year.