The Greater Toronto Area is teetering on the brink of a buyer’s market, and slower sales have led to slashed forecasts, reveals the Canadian Real Estate Association’s May numbers.
The national sales-to-listings ratio for the GTA measured in at 41 per cent last month. A range between 40 – 60 per cent is considered balanced, while above and below are considered seller’s and buyer’s markets, respectively.
CREA’s report depicted a continued slowdown in the Toronto real estate market, with sales sliding 25.3 per cent in the region. Activity was also down in parts of the Golden Horseshoe, including Oakville-Milton, and Hamilton-Burlington. In fact, Toronto sales have effectively offset markets that experienced gains, which include Calgary, Edmonton, Ottawa, and Montreal.
Fair Housing Plan’s Impact Felt in GTA
CREA President Andrew Peck places the blame squarely on the fallout from the 16-part Ontario Fair Housing Plan, which was announced in late April by the provincial Liberals in efforts to calm unsustainable price growth, and introduced rent controls for Toronto condos. “Recent changes to housing policy in Ontario have quickly caused sales and listings to become more balanced in the GTA,” he wrote. “Meanwhile, the balance between supply and demand in Vancouver is tightening up, while many places elsewhere in Canada remain amply supplied.
“This is the first full month of results since changes have resulted in more balanced housing markets throughout the Greater Golden Horseshoe region. For housing markets in the region, May sales activity was down most in the GTA and Oakville. This suggests the changes have squelched speculative home purchases.”
Slower Sales Lead to Slashed Forecast
The association has adjusted its forecast to account for a 1.5-per-cent decline in national sales to 527,400 units, and a further 0.8-per-cent drop in 2018. It also expects the average price to increase by 7.4 per cent to $526,000 this year, with 16 per cent in Ontario, and up to $535,400 nationally by next year.
The average national home price in May rose 4.3 per cent year over year to $530,304. Price growth in the Greater Toronto and Vancouver regions account for $130,000 of the average.
A Return to “Balanced” Conditions
From a national perspective, the market – which CREA has referenced at “balanced” for the first time since 2015 – has seen a “sizeable decline” in month over month sales, falling 6.2 per cent from April to May, and down 1.6 per cent year over year.
The number of newly listed homes rose 0.3 per cent over the monthly period while the MLS Home Price Index rose 17.9 per cent. The national sales-to-new-listings ratio is 56.3 per cent, dropping from the edge of seller’s market conditions at 60.2 per cent in April. However, despite the dramatic plunge in the GTA’s ratio, it remains above 60 per cent in over half of CREA’s monitored markets, and above 70 per cent in the Greater Vancouver and Fraser Valley.
Months of inventory – the amount of time it would take to entirely sell off all homes listed for sale – rose to 4.7 per cent in May, up from 4.3 per cent in April – similar to 2016 levels. CREA points out that while the trend in the GTA has eased from the all-time lows plaguing buyers, it still has one of the tightest markets, with less than two months-worth of homes for sale.
Condos See Greatest Price Gain
As for home types, apartment-style dwellings saw the greatest price gains, rising 20.5 per cent. Low-rise home types still saw increases, though at a less frenetic pace; townhouses and rowhouses were up 19.3 per cent, two-storey single-family homes rose 18.4 per cent, and one storey single-family homes rose 14.5 per cent. CREA reports benchmark prices rose in 11 of 13 markets.
By region, BC continues to see price recovery following a slow start to the year, with prices up 8.8 per cent in the Greater Vancouver Area, up 14.7 per cent in the Fraser Valley, and over 20 per cent in Victoria and Vancouver Island.
Despite slower sales, prices were still up robustly in the GTA, with a 29 per cent increase in Toronto, and up 23.9 per cent in Oakville.
Calgary experienced 0.2 per cent price growth, while they decreased in Regina (-1.7 per cent), and Saskatoon (-2.8 per cent, the 22nd consecutive month-over-month decline).