We strive to stay on top of the market, so when news sources started announcing prematurely that the market had dipped, we decided to wait until the stats from the Toronto Board and the Regional Boards were released, before chipping in our opinion. Today, we have a very clear picture of what’s happening in our market, and we want to share it with you in the most clear and concise way possible.
The plain TREB stats are:
– May 2017 had 20.3% fewer sales than May 2016
– Average sales price is down 4.3% May compared to April
– There were 42.9% more homes for sale in May 2017 compared to May 2016
– Prices from May 2016 to May 2017 are still up 17%!
Regional stats reveal in Halton (Oakville, Burlington, Milton):
– May 2017 had 13.5% fewer sales than May 2016
– Average sales price is down 2.66% May compared to April
– There were 45.96% more homes for sale in May 2017 compared to May 2016
– Prices from May 2016 to May 2017 are still up 20.11%!
What does this mean?
It means, homeowners can’t expect to sell as fast and for as much as their neighbors who sold in January and February, but they’ll still benefit from considerable appreciation. If you’re selling and then buying, you will benefit from the increased inventory and more predictable prices. Jason Mercer, TREB’s director of market activity, claimed the influx of listings is from sellers who are taking advantage of the strong price growth over the last few years. These sellers delayed their move because of the uncertainty of the market, and now that the market shows signs of balancing, they’ve decided to sell.
What’s our front-line perspective?
6 weeks ago, we were fighting in bidding wars against 10-20 other bidders. The winning bid in a war like that is usually significantly above the recent comparable sales; the buyers assure themselves that they made the right decision, because they speculate the market will catch up to the price they paid. This type of speculative bidding is almost gone, and in general, homes are seeing far fewer showings and offers. But, for the size of our market and the amount of homes for sale, we are still in a housing shortage.
How does this affect sellers and buyers?
Compared to May 2016, which was a historic month for low inventory, this market is significantly more balanced. The influx of listings is helping to balance the market and temper prices that were appreciating too fast. The speculative bidders are gone, so more buyers are now in a position to purchase a nice home in a decent area without having to bid more than the home is reasonably worth.
The list price to sale price ratio across the GTA has dropped, and in many pockets is now around 100%. That means, pricing a home below market value to try compel a bidding war, might backfire. Instead, more and more sellers are listing homes at prices they would accept.
Even though inventory is up more than 40% compared to May last year, we are still in a very strong Seller’s Market. If you look at the size of our market, the percentage of homes for sale is still very low.
What is our long-term outlook?
Historically, every time the government intervenes in a market, it’s the way the consumers react to the changes that depicts how the market reacts. The influx of listings and the small drop in prices is not conducive to the fractional foreign buyers who were squashed by Wynn’s proposed rules. Instead, our statistics reveal a more tempered market because speculative purchasing has stopped, and inventory has swelled. It’s these two facts that have lead us to a more balanced and fair market. However, this might not last long, as many buyers who are sitting on the sidelines decide to pursue purchasing a home again. We still have a lack of inventory, and if supply dries up in the fall, prices will climb.
Real Estate is a great investment, if purchase with a sound mind and held for a reasonable amount of time. The speculative bidding in some neighbourhoods did not make sense, and now that they have stopped, it’s a great time for a buyer to enter the market. This more balanced market will give families the confidence to sell and buy, and will lead to a more healthy market.