According to the Toronto Real Estate Board (TREB), MLS-listed sales in the GTA in June were down more than 37% compared to June 2016 and nearly 40% down in the first 14 days of July. The Canadian Real Estate Association (CREA) said Monday that a 15% overall drop in June sales was the largest national sales decline in seven years.
“We are in a period of flux that often follows major government policy announcements pointed at the housing market,” says new TREB president Tim Syrianos in a release. “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 home owners 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.”
According to Royal LePage CEO Phil Soper in the Toronto Star, market conditions say we shouldn’t be worrying. The last time we saw a housing crisis, in 2009, it followed a global financial crisis, and Soper says the same conditions don’t exist today. Inflation is under control, employment stats are improving, and the economy is expanding — but the big orange wild card down south still has the potential to throw a spanner in the works.
“The most obvious external downside risk is the trade negotiations between Canada and the U.S.,” Soper said according to the Star. “A significant negative outcome on trade wouldn’t have immediate impact on our economy but it would have immediate impact on consumer confidence.”
At least one expert, though, says we’re witnessing the bursting of the bubble. John Pasalis, president of Realosophy Realty, told Business News Network that the sales decline has nothing to do with Ontario’s 16-point housing plan introduced in the spring, but is rather the market just “unwinding and correcting itself.”
Pasalis believes recent increases in resale listings coupled with cooling demand mean it’s “definitely a turning point for Toronto’s real estate market.” He suggests that moving forward, location is the most important consideration when it comes to buying and selling. Areas with the most inventory, such as York Region, are most vulnerable to declines in prices. He predicts a big surge in listings in September.
Syrianos is right about flux, at any rate. Times are changing. Whether it’s permanent change or a blip remains to be seen, but it’s all led to some confusion for buyers unsure what they should be paying.
For the first time in recent memory, homes in the GTA are selling lower than asking. According to ReMax Hallmark Realty agent Geoffrey Grace in the Globe and Mail, he’s seeing situations where buyers would have been interested if they’d known homes were going so much under listing prices, and are missing out on houses they’ve been watching for a while. “Non-buyer’s remorse,” he’s dubbed it, and it’s a big difference from the fear of missing out that has driven many a frenzied bidding war.
If buyers remain confused, sellers could take their homes off the market, in the belief that they won’t get the prices they want (and they may be right). That could mean Pasalis is right about a surge in September, as sellers take the stagnant summer market off and try again in the fall.
Whatever’s going on, it’s clear both buyers and sellers are going to have to get used to making deals in what is, for the first time in ages, becoming a balanced market.
The resale condo market specifically is showing more resiliency, in spite of a dip in sales activity of 23.4% in June compared to June 2016, according to TREB. Average prices surpassed the half-million mark in the GTA, up nearly 30% in the second quarter of the year, which means condos, too, are creeping into unaffordable territory for many.
All that said, we must remember to look at the resale market and new home market separately. While there seems to be a slowdown in the resale market, the new home market is still hot in certain areas of the GTA, specifically in the new condo market, according to the Building Industry and Land Development Association (BILD). Last month, new condo sales hit a record high and prices are still on the rise!
I’m looking forward to seeing how consumers respond to both the resale and new home market as the busy fall season approaches.