Toronto Real Estate Market Watch 08/18
We can’t believe we’ve surpassed the halfway mark for the year…time has gone by fast, and the summer momentum in the real estate market has kept us extremely busy! The market is usually slow in July – it’s the middle of summer which means families are up relaxing at the cottage, people are travelling, etc. – but not this year. There were 6,961 property sales across the Greater Toronto Area for the month of July, marking an 18.6% increase from the previous year! It’s a complete flip from the tone of the market a year prior, when Ontario’s Fair Housing Plan was causing ripples across the market to put a halt to double digit price gains. The policy was followed by tighter lending restrictions that reduced the Toronto buyer’s spending capacity, then followed by a series of interest rate hikes – although lending rates remain at historically low levels.
We will acknowledge comparing July 2018 to July 2017 is tricky – July 2017 wasn’t the most impressive month for market stats by a long shot. Yet we see a positive shift happening; a year of recovering from policy change has brought new enthusiasm into the market. After the whirlwind month of a strong June, there were increases recorded in both the number of home sales, and average selling prices for the second consecutive month.
So, what does this mean? Does it mean the market is surging towards new, very expensive heights all over again? Not at all. The housing market is actually showing signs of stabilization as sales are surging while benchmark prices remain stable. Detached home sales in the Toronto core & GTA jumped 27%, while the benchmark price for the segment fell 4.2% to $923,800 (a detached house in Toronto costs $1.35 million on average, compared to $907,347 in the surrounding regions). The condo apartment segment, which has seemingly been unstoppable in gains in both price and sales, saw sales rise by 9.4%, but prices fell relative to June, the first monthly decline since September 2017 (although prices rose 8.3% from last year to $501,400!)
What is still hurting an otherwise strengthening market is the problem of supply; listings dipped 1.8% year-over-year, while the total active inventory of properties available for purchase rose 5.2%. Jason Mercer, the Toronto Real Estate Board’s director of market analysis, had this to say: “We have certainly experienced an increase in demand for ownership housing so far this summer. It appears that some people who initially moved to the sidelines due to the psychological impact of the Fair Housing Plan and changes to mortgage lending guidelines have re-entered the market.”
The lift in resale home numbers so far this summer has signalled a stronger second half of the year than the real estate board and industry executives have been predicting. You might be wondering: doesn’t skyrocketing prices mean the market is strong? Which is fair to wonder, but historically, prices “falling” is NOT a bad thing – it is a readjustment from the unstable trajectory of unprecedented gains. Detached prices might be lower than the month before, but the size of the losses improved, showing us that stability is on the horizon – many are already feeling this due to the huge surge in buyer confidence we are seeing this summer!
Do you want to talk more about where the market is headed? Or what these price adjustments mean? Then send us an email to firstname.lastname@example.org were we would be more than happy to answer any questions you might have about listing or buying!
2018 Report – http://communications3.torontomls.net/statistics/mwatch/2018/07/mw1807.pdf
2017 Report – http://communications3.torontomls.net/statistics/mwatch/2017/07/mw1707.pdf