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The 2018 housing market is chillier than last year’s thus far, but activity promises to pick up in the coming months, according to analysis from the Toronto Real Estate Board (TREB).
Their January data reveals 4,019 homes changed hands in the Greater Toronto Area last month, a 22-per-cent drop from 2017. New listings also continued their upward climb, with 17.4 per cent more homes placed on the market compared to last year. However, TREB notes, that’s still the second lowest level of inventory over the 10-year trend.
The average home sale price fell 4.1 per cent year over year to $736,783, with detached houses bearing the brunt of softening prices, down 9 per cent in the GTA. By comparison, values rose 15 per cent for condos, with townhouses and semi-detached homes down 2 per cent, respectively.
Housing experts have widely expected January would usher in slower real estate sales, as the market adjusts to new federal mortgage qualification rules and overall rising interest rate environment. However, such conditions will be short lived, says TREB President Tim Syrianos, who is confident buyers will return in abundance once the impact from the new policies is absorbed.
“As we move through the year, expect the pace of home sales to pick up as the psychological impact of the Fair Housing Plan starts to wane and home buyers find their footing relative to the new OSFI-mandated stress test for mortgage approvals through federally-regulated lenders,” he stated.
And, while a number of new housing policies, taxes, and mortgage rules slowed GTA market growth by double digits in the second half of last year, that’s in comparison to record-breaking activity that was quickly becoming unsustainable for most buyers, says Jason Mercer, TREB’s director of market analysis. He says today’s more balanced market fundamentals will eventually lead to greater price growth.
“It is not surprising that home prices in some market segments were flat to down in January compared to last year,” he stated. “At this time last year, we were in the midst of a housing price spike driven by exceptionally low inventory in the marketplace. It is likely that market conditions will support a return to positive price growth for many home types in the second half of 2018. The condominium apartment segment will be the driver of this price growth.”
Lauren Haw, Broker of Record at Zoocasa Realty, concurs that perspective is crucial when looking at the year-over-year data. “It’s important not to let year-over-year figures skew how we look at market conditions. We know that sales are down from 2017’s abnormally high first quarter levels,” she says. “Sales are in-line with the hot 2016 market – when we saw headlines about the ‘continuous overheating’ market. It’s also important to focus on individual markets to see what is going on, in places like Peel, Halton and Durham Regions as opposed to the TREB Region as a whole.”
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Indeed, most of the 416 and 905 markets remain within balanced territory, offering buyers greater opportunity compared to the frantic sellers’ conditions that defined the 2016 and 2017 markets. However, the GTA remains a tale of varied regions; much of the pain continues to be felt in York, where sales have declined 37.7 per cent year over year, with prices sliding 6.3 per cent to an average of $870,483. An 11.3-per-cent uptick in listings have pulled the market firmly into buyers’ conditions with a sales-to-new-listings ratio of 29 per cent (a ratio between 40 – 60 per cent indicates balanced conditions, with above and below signalling sellers’ and buyers’ markets, respectively). The City of Toronto, Halton, Peel, and Durham all remained in balanced territory in January.
By Penelope Graham