June 2017 Market Stats
Sales are down but prices are up. Let's take a look behind the numbers.
"So how's the market?" seems to be the number one question on everyone's mind. Some stories paint a picture of doom and gloom while others talk of strong growth and a continued increase in year over year prices. So given these conflicting views, what should you know?
Overall, sales are down, prices are up and the Toronto housing market remains very healthy. There is still incredibly high demand for homes in GTA, especially in the condo market which saw a 23.2% increase in the average year over year price! Across all home types in the GTA, the year over year average sale price increased 6.3% from June 2016 to June 2017. This is despite the fact that the number of active listings in the GTA increased from 12,931 in June 2016 to 25,837 in June 2017, while the number of sales dropped from 12,725 in June 2016 to 7,974 in June 2017. While it might initially seem as though there is a slew of new listings and fewer sales, there are two important items to note. First, that when a listing for a property is terminated and then re-listed, it counts as 2 separate listings under TREB's MLS statistics. For instance, if 123 Main Street is listed for $950,000 on June 6th then the listing is terminated and re-listed at a new price of $899,000 on June 15th, that counts as 2 listings because even though it is the same property, each listing has a unique MLS number and therefore, are counted separately. While there are more listings out than this time last year, this 'double counting' of properties (or triple, quadruple, etc. depending on the home!) can make these numbers can look significantly higher than they actually are. Second, the 2017 year started incredibly strong with January, February, and March having a 11.8%, 5.7%, and 17.7% increase in the number of sales year over year respectively (not to mention mind-boggling year over year increases to the average sale price of 22.3%. 27.7% and 33.2%). Therefore, in hindsight, it appears that the Spring market started much earlier this year due to the warm weather and big price price increases.
In addition to Ontario's Fair Housing Plan which was announced in April of this year were several other policies that have affected the market. Remember the "Stress Test" that was implemented in October of 2016? It stated that buyers who had less than a 20% downpayment were now required to qualify for their mortgage at the posted rate (currently at 4.64%) rather than what a bank would be offering them (say 2.59%). This drastically decreased the buying power of some house hunters and is one of the reasons why detached and semi-detached homes had fewer sales while condos saw a drastic increase. With the average pre-approval lasting 120 days, most of these buyers would have rushed to purchase in January or February of this year to ensure they would not suffer a loss in their purchasing power by habving to qualify under the new rules. Additionally, there have been increases to both the Provincial and Municipal Land Transfer Tax which are both payable on closing and unable to be financed or rolled into a mortgage. Therefore, larger and larger down payments areneeded to cover these additional costs.
These factors, when combined with the new Ontario Fair Housing Plan (which may have over-estimated the impact of foreign buyers within the Greater Golden Horseshoe Region), have resulted in a temporary pause in the market activity as some buyers and sellers wait to see the long term effects that these measures could have on the market. That being said, prices are continuing to rise and many buyers who were frustrated with bidding wars are now having success, while sellers on the market are continuing to receive excellent prices for their homes.