The Canadian Real Estate Association (CREA) lowered its national resale housing market forecast for 2017 and 2018, and it’s all Ontario’s fault.
The Fair Housing Plan was introduced by the Ontario government to reign in the super hot Greater Golden Horseshoe (GGH) market. Well, if the province wanted hesitant and more cautious buyers, they got the job done. Plus, the tighter mortgage rules and higher default insurance premiums will deter buyers into 2018.
Since April 2017, there has been a big drop in the resale market, but the CREA expects sales to partially rebound later this year. Since there are typically many sales in the GGH compared to other regions in Canada, an unexpected drop drags down the national average significantly.
Nationally, the CREA adjusted its forecast down by 5.3% to 506,900 sales in 2017. This is 20,000 lower than June’s forecast, and it’s mostly because of Ontario’s slowdown.
The national average price is still expected to go up, but not as much as previously anticipated. The CREA changed its forecast to an increase of 3.4% to $506,700 in 2017. The lower forecast is due to the expectation that there will be fewer high-end home sales in the GGH for the rest of this year.
There was actually a record number of high-end homes sales in Toronto in 2017, but the CREA believes this will not occur again in 2018, so the national average home price is expected to decrease by 0.6% to $503,500.
There will also be fewer home sales in 2018, down 2.3% to 495,100 – and yes, it’s Ontario’s fault again. Many Ontario markets have seen or are on track for a record year of sales in 2017, but the CREA doesn’t expect another record year to follow.
All this said, east Ontario is actually doing okay. Sales are up and inventory is steady but dropping slightly, which is okay because they had an abundance of supply over the last couple years.
We recently learned from the Building Industry and Land Development Association (BILD) that the Greater Toronto Area’s (GTA) new home market also saw a big drop in sales through the summer, especially in August.
There were just 795 new home sales in August, which is a drop of 69% compared to the same period last year. Clearly, the effects of the Fair Housing Plan were felt in the new home market as well.
But, the GTA is still on track for a record year of new home sales, mostly because of the strong condo market, which makes up 80% of the sales.
We’re curious about whether the CREA’s predictions apply to the new home market. Will the average price and number of sales be lower next year? It’s possible. But we’re already starting to see a bounce back with successful openings like the ones that Fieldgate had in September.
Time will tell – fall is supposed to be busy for the new home market. Will the resale market see an uptick?