- Toronto housing readjustment good news for buyers
- Market uncertainty spurs shifting tactics
- Interest rate tipping point?
- Condo price boom breathes life into sluggish market
- Luxury market readjusting, but confident
As Toronto’s real estate market came to grips with new market conditions – heavily influenced by the provincial government’s new Fair Housing Plan – the months following the April launch of the initiative saw plunging sales volumes. However, the still relatively affordable condo market, along with other non-detached single-family housing segments has attracted clients in large numbers, pushing prices up. Signs also seem to be pointing towards renewed activity in the upper echelons of the market, as buyers and investors adjust to new realities.
Toronto housing readjustment good news for buyers
The Toronto Real Estate Board’s newly released data set confirmed what GTA residents have known for months – real estate activity has significantly slowed down. However, while the shifting market conditions have brought the total sales volume down by almost 35% compared to August 2016, the Greater Toronto Area still saw a 3% year-over-year price appreciation.
As the market was rocked by Ontario’s 16-point Fair Housing Plan, sales activity waned, as many decided to stay on the sidelines, watching the market’s evolution. As average days spent on the market increased to 25 compared to 2016’s 18, the number of new listings decreased 6.7% year-over-year, with potential sellers holding off on listing properties during shifting markets.
Market uncertainty spurs shifting tactics
With Ontario’s economic indicators at healthy levels, and the stable economy of the GTA, buyer interest has not disappeared – tactics have merely shifted. As sales activity decreased, bidding wars have almost completely disappeared as buyers realized market conditions tilting in their favor. With massively decreased sales – down 41.6% in the case of detached single-family homes in the GTA – many buyers are waiting for prices to decrease as well, with fears of overpaying and hopes of more affordable prices.
Interest rate tipping point?
However, the waiting game played by both sellers and buyers might come to an end – or at least spur increases in sales activity. Following two consecutive interest rate hikes by the Bank of Canada in just 3 months, some buyers are expected to take the plunge due to fears of missing out on current market conditions and in anticipation of possible further increases in mortgage rates.
Condo price boom breathes life into sluggish market
While sales activity has weakened across all housing categories, the Greater Toronto Area’s condo market saw its sales slow by “only” 28%. At the same time, however, prices have shot up. In fact, the average condo sold with a 21.4% price hike compared to the year-ago figure, currently clocking in at $507,841. With detached homes selling for an average of $968,494, and the fall kicking off with a new 1% key interest rate, condo sales are expected to show dynamic moves, as long as buyer interest doesn’t push price growth into more unaffordable territory.
Luxury market readjusting, but confident
The luxury condominium market also performed well, even as summer sales decreased. According to Sotheby’s International Realty data, condos priced $1 million and over saw an 8% hike in sales activity in the Greater Toronto Area, while the City of Toronto experienced a 15% growth. As the summer months saw the market begin to accept new trends and indicators, August sales fell 11% in the 905, while the City slid 6%.
New stock, however, paired with upcoming rent reforms are expected to bring a significant amount of new condo stock on the market before the year’s end, per the same source. Although still adjusting to new market trends, and feeling the effects of the newly-introduced non-resident speculation tax, the GTA’s top-tier housing market is predicted to maintain dynamic activity even as price growth and sales activity readjust to more sustainable levels.