Toronto Real Estate Market Watch 05/18
Continuing the 2018-year trend, April showcased another month of declining year-over-year numbers. While these numbers look drastic at first, the data can be misleading. Many will see the 32% decrease in sales and the 12.4% decrease in the average price as a major shift, but it’s not as dramatic as it looks.
The MOI (Months of Inventory) sits at 2.3, which translates to an incredibly strong seller’s market, plus the average price has already risen 9.2% since January 2018. The numbers suggest that recent policy changes – including tougher mortgage-qualification rules that took effect on January 1st – have not sent the housing market into steep decline as some analysts had feared, and the impact may already be stabilizing.
In addition, something MAJOR happened – detached home prices rose considerably. In April alone, prices rose by 4.7% after 3 months of stagnant numbers…this is a SIGNIFICANT jump! That’s an average increase of $60,000 in just one month for detached properties.
Considering the role of the detached housing market in 2017 (the most expensive form of real estate being traded) there was a direct correlation between the decline of that market and buyer/seller confidence affecting the overall average price.
The resurgence of the detached market will only spell good things moving forward. With a more confident consumer base, we expect solid gains in the second quarter, which will gain traction end of May, beginning of June.
In other news, foreign buyer activity has dropped in the GTA – from April to May 2017, foreign buyer participation was at 5.9%, which has now dropped to 2.1%. The non-resident speculator tax has hit the foreign buyer market and its causing ripples, but in the long run, what does it mean?
In retrospect, the taxation on this market has NOT lowered prices or created more supply; but the psychological impacts are there, as it has boosted consumer confidence that the market has become more stable.
In reality, the Building Industry and Land Development Association (BILD) released new home market figures for March 2018 and reported the benchmark price for a new single-family home in the GTA was still above $1.2 million, and the benchmark price for a new condo unit jumped nearly 40% year-over-year to more than $740,000.
So, what does this mean for the market?
Confidence is building back up after a temporary standstill between buyers who were holding off to see if prices would drop further, and potential sellers holding off due to concerns over inventory for their next home or waiting for prices to climb back up.
Bidding wars are also starting to be more common place outside of core areas.
This reminds us of a few years ago when the market was unusually quiet in the spring but led to a momentous summer market.
We believe there will be even more confidence after May’s numbers are posted; early June should be a prime time to list, but keep in mind things start to cool off in July with summer right around the corner!
To sum up the future of Toronto Real Estate Market, “once we are past the current policy-based volatility, home owners should expect to see the resumption of a moderate and sustained pace of price growth in line with a strong local economy and steady population growth” according to Jason Mercer, the TREB’s Director of Market Analysis.
To talk more about how this market affects you, contact us today!