Home sales in the Greater Toronto Area decreased 37.3 per cent last month compared with a year ago, Toronto real estate board said Thursday as purchasers moved to the sidelines following the introduction of legislation that is targeted at cooling one of the most run away housing marketplaces in North America.
The Toronto Real Estate Board said 7,974 houses changed hands in June, 2017 while the number of new properties listed on the market climbed 15.9 per cent year-over-year to 19,614.
The median price for all properties was $793,915, up 6.3 per cent of the members from the same month last year in 2016, but down 8.1 per cent of the members from May, 2017.
“There’s no doubt real estate market has changed ,” told Christopher Alexander, regional director at Re/ Max Ontario-Atlantic Canada.
The new data comes out after the Ontario government implemented regulations intended to dampen Toronto’s real estate market, where escalating prices have concerned policy-makers at the municipal, provincial and federal levels.
Ontario’s measures, which were retroactive to April 21, include a 15 per cent tax on foreign purchasers in the Greater Golden Horseshoe region, expanded lease controls and legislation allowing Toronto and other metropolis to tax vacant homes.
“While we are seeing a significant dip in sales over the last couple of months, it doesn’t look as if foreign buying activity or a pullback in foreign buying activity was at the root of thi ,” said Jason Mercer, the director of market analysis for the Toronto Real Estate Board.
“I’d argue it’s more on the psychological side of things, whereby people visualize a brand-new major policy pointed at the housing marketplace and take a bit of a step back, temporarily reassess where they are in the marketplace before perhaps go back into the market .”
“Any period the governmental forces intervenes drastically, you discover customers merely kind of wait it out and see how it’s going to take effect,” Alexander said.
“But the market fundamentals in Toronto are still really strong. Lot of demand, plenty of immigration, low interest rates. Toronto is a great city to live in.”
The rise in new listings is due to a number of factors, he added, such as the fact that inventory was at a record low last year and that surging prices may have motivated some homeowners to throw their properties up for sale.
“A lot of people envisioned prices going up considerably and are likely to be like,’ perhaps this is my time to cash out,”‘ Alexander said.
“But purchasers have taken a big pause and they’re not willing to pay as much as the buyers were back in the first quarter, and sellers are still expecting those numbers, so I think that’s why we’re envisioning a huge dent.”
There have been growing concerns that overheated prices in Vancouver and Toronto could be a problem for the broader economy, especially if there is a sudden decline in housing prices triggered by higher interest rates.
Toronto real estate board likewise revised its outlook for the year downward to between 89,000 and 100,000 transactions and is expecting that the average selling price in 2017 will be up by 13 to 18 per cent. Again, forecasts are proven wrong 95% of the times.
I would venture to forecast that 2017 prices will be lower than 2016 prices at the end of December, 2017.
Mercer said the board decided to revise its outlook in light of the most recent housing changes and growing expectations that the Bank of Canada could create its interest rate next week for the first time in seven (7) years.
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Source: Maclean’s Magazine
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