The fallout from April’s new housing rules resounded through the market for the third month in a row, as sales plunged 40.4 per cent from last July, reveals the Toronto Real Estate Board. A total of 5,921 homes exchanged hands last month, down 25.7 per cent from June.
That’s having a pull-down effect on prices: While the average price for all home types combined is 5 per cent higher than in July 2016, it tumbled 6 per cent from June to $746,218. The benchmark property price, a Bloomberg measure that tracks home values over time, fell 4.6 per cent to $773,000 – the greatest decline since 2000 when the agency started tracking the data. Detached houses had the greatest negative influence on the market, with sales falling 29.4 per cent month over month, and prices down 5.25 per cent to $1,000,336.
Condos in Toronto were the least scathed, with 22.3 per cent fewer sales at 1,840 units, and prices down 3.46 per cent from June to an average of $501,750. However, sellers seemed less frantic to move their homes last month, as the surge of new listings experienced in May (up 42.9 per cent year over year), trickled to an increase of just 5.1 per cent from last year. That could indicate less motivated sellers are choosing to wait and see how the short-term demand trend will play out.
June – July % change (TREB region)
|All Home Types||-25.70%||-6.00%||-27.70%|
Year over year % change (TREB region)
|All Home Types||-40.40%||5.00%||5.10%|
Source: Toronto Real Estate Board
Lauren Haw, Broker of Record at Zoocasa Realty, says the month over month trend does indicate the market is softening at a faster pace.
“The typical month-over-month decline from June to July is 15 per cent, this year we saw a 30 per cent decline in the same period, indicating an increased velocity in the slowdown,” she says.
INFOGRAPHIC: July Sales and Prices Across TREB Region
Click on the infographic to zoom in.
While the numbers may seem daunting, it’s important to keep in mind that they’re slowing from a historical peak – GTA real estate experienced its greatest price and sales gains ever in 2016, and this summer’s home values still knock historical averages out of the park. TREB President Tim Syrianos said current trends are being fueled by buyer unease following the Ontario Fair Housing Plan, rather than a true downturn in demand.
“Clearly the year-over-year decline we experienced in July had more to do with psychology, with would-be home buyers on the sidelines waiting to see how market conditions evolve,” he said.
TREB has been critical of the measures made to cool housing market appreciation, and particularly of the new 15-per-cent Non-Resident Speculation Tax, saying changing policy without the full data picture could be short sighted. Syrianos re-iterated this stance in the July report, commenting on recent provincial findings that foreign buyers account for only 4.7 per cent of transactions between April 24 and May 26.
“A recent release from the Ontario government confirmed TREB’s own research which found that foreign buyers represented a small proportion of overall home buying in the GTA,” he said.
Summer Season Typically Slower
While the slowdown in sales is more pronounced than in recent years, experts point out that a slow July market is the norm. “What we’re seeing in the Toronto real-estate market right now is the result of two factors. We have to take into account that we’re in the height of summer when we do traditionally see a slow-down, as well as the fact that sellers are still waiting to see what happens following the regulatory measures imposed by the government in the spring,” says Haw.
Her sentiments are echoed by TREB CEO John DiMichele, who stated, “Summer market statistics are often not the best indicators of housing market conditions.”
Both he and Haw say greater insights will be gleaned post-Labour Day, which is typically a busier time in market. “Buyers are waiting to see what happens in the early fall, when the real estate market traditionally sees an upswing,” says Haw.
A Better Time to be a Buyer
The silver lining to July’s slower market is buyers are finally getting a much-needed break after enduring a year of harrowing bidding wars and overvaluation. Haw says that there’s greater choice available for those ready to jump into the market.
“Another consideration is the high-amount of inventory we have available – buyers are becoming pickier about the quality of units that they want,” she says. “Good homes are selling quickly, sometimes still in multiples. The less-than-ideal properties are sitting on the market at unrealistic prices. This demonstrates a perfectly balanced market.”
But buyers are wise to enjoy greater selection while it lasts – TREB Director of Market Analysis Jason Mercer says the market will likely shift again as previously priced-out buyers re-enter the game.
“Looking forward, if we do see some would-be home buyers move off the sidelines and back into the market without a similar increase in new listings, we could see some of this newfound choice erode,” he says. “The recent changes have masked the fact that housing supply remains an issue in the GTA.”