While summer temperatures are sizzling in the city, the residential housing market has certainly not kept pace. Hardly a full-scale cooling-off, as many are billing it, but rather a healthier, less frenzied space to find yourself, especially if buying a new home remains top of your 2017 To Do list. But sadly, even with the cooling-off it will still cost you.
With the release of yesterday’s June numbers, by Toronto Real Estate Board (TREB), we bore witness to an early indicator of the impact the province’s big move to grab hold of, and begin to correct, our out-of-control housing market. The number of home sales plummeted by a staggering 37.3 per cent, as compared to this time last year. In pure terms this meant there were 7,974 home sales reported in June 2017, as compared to 12,794 for the same period last year. And while the number of new listings was up by 15.9 per cent, this too was a marked decline, as compared to the 49 per cent surge in supply that occurred what feels like just days ago, back in May of this year.
Sadly, prices didn’t see nearly the same dramatic drops.
Not only has TREB issued a new 13 to 18 per cent forecast increase for the balance of 2017 home sale prices (against their previous 10 to 16 per cent increase), June’s average selling price, according to TREB, was indeed 6.3 per cent higher.
From a historical perspective, these double-digit rates still represent very strong growth rates.
Following the announcement of the Ontario Government’s Fair Housing Plan, back in April, TREB commissioned Ipsos Reid to undertake two consumer surveys, one focused on home buyers; the other on home sellers. The most notable finding indicted that 40 per cent of likely buyers would be first-time home buyers, a marked decline from 53 per cent in Ipsos’ Fall survey. And here again pricing is likely the single biggest influence.
“The recent Ipsos survey results suggest that home buying activity in the GTA will remain strong moving forward. The year-over-year dip in home sales we have experienced over the last two months seem to be the result of would-be buyers putting their decision to purchase temporarily on hold while they monitor the impact of the Fair Housing Plan. On the supply side of the market, it certainly looks as though buyers will benefit from more choice in the second half of 2017 compared to the same period in 2016,” said Jason Mercer, TREB’s Director of Market Analysis and Service Channels.
While the impact of the Fair Housing Plan may be temporary, it is important to note the probability of higher borrowing costs over the next 12 months has increased. The consensus view is that the Bank of Canada will raise its Target for the Overnight Rate at least once in the second half of 2017, and perhaps even twice. While advertised discounted mortgage rates remain at or near historic lows, this, coupled with the still rising home sale prices will put a bigger dent in your pocketbook.
Ultimately the purchase of a new home in Toronto will remain an expensive endeavour. But it seems we can now breathe a collective sigh of relief. While existing home owners, who are still set to list their homes may have missed the peak, the resulting impact for most will be a better supplied, less urgently frenzied market, with sustained price growth.