Property sales plunged in Toronto in July
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Jason Mercer, Director of Market Analysis with the Toronto Real Estate Board, says it's natural that buyers are stepping back.
The
latest round of data from the Toronto Real Estate Board reveals the
slowdown in the city’s housing market has intensified. BNN’s Jon
Erlichman reports.
From
CTV Kitchener's Marc Venema: Home sale volume and prices in the
Kitchener-Waterloo area seem to be falling back to normal levels.
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Salmaan Farooqui, The Canadian Press
Published Thursday, August 3, 2017 7:19AM EDT
Last Updated Thursday, August 3, 2017 3:32PM EDT
TORONTO -- After 16 years, Dina Alker is going to put her house in
Toronto up for sale Monday, joining the throngs of others in the city
who have decided to downsize as a chill gripping what was once one of
the hottest real estate markets in North America takes hold.
"I'm at a turning point in my life," said Alker, 58, who plans to buy a condo.
"It's a big responsibility in a house. You're never really worry-free."
Alker is unfazed by data released Thursday
showing that sales in the Greater Toronto Area tanked last month by
40.4 per cent compared to July 2016 after a bout of frantic buying at
the start of the year. Instead, she sees a silver lining -- prices
dipped for the third consecutive month.
"It may be not as favourable (to sell), but when I go to buy, there's an advantage there."
The decline in property transactions was driven by fewer sales of detached homes in Toronto and its surrounding areas, the Toronto Real Estate Board said.
The average selling price of all properties in July was $746,218, roughly triple what it was when Alker bought her home and up five per cent from the same month last year.
But that's down nearly $175,000 since April, when the Ontario government introduced more than a dozen measures -- including a 15 per cent tax on foreign buyers -- aimed at improving home affordability.
Tim Syrianos, president of the Toronto Real Estate Board, said the decline in activity has less to do with foreign buyers and more to do with potential homebuyers waiting to see how the market plays out.
"Clearly, the year-over-year decline we experienced in July had more to do with psychology, with would-be home buyers on the sidelines waiting to see how market conditions evolve," Syrianos said in a statement.
Sal Guatieri, a senior economist with BMO Capital Markets, said Toronto's housing market is starting to come back to normal levels after going through a "frenzy" early this year.
"Buyers are stepping back, there's more sellers, and that just seems to be contributing to greater downward pressure on detached home prices in the Toronto region," said Guatieri.
"That was just not sustainable and certainly not healthy, and greatly increased the risk of a severe correction if economic circumstances changed."
A year ago, foreign buyers in Vancouver also had to pay a 15 per cent tax. The effect was immediate: the number of transactions tumbled in the ensuing months. However, Vancouver did not see the plunge in prices Toronto is now experiencing.
Tom Storey, a sales representative with Royal LePage, said he believes Toronto's market will rebound much like Vancouver's did.
"If you cross-reference what happened in Vancouver after the (foreign buyers' tax ) announcement, they went through four-to-six months of people cooling down," said Storey. "Then it ramped up again."
Guatieri said it's worth noting that while detached housing was what drove the drop in sales, condo sales have remained strong, helped in part by their relative affordability.
"But I wouldn't be surprised if we see a little bit of cooling in that department in the next few months," he said.
The average price of condos throughout the GTA in July was $501,750, an increase of 23.2 per cent from a year ago. Detached homes on average sold for $1 million, up 4.9 per cent.
"I'm at a turning point in my life," said Alker, 58, who plans to buy a condo.
"It's a big responsibility in a house. You're never really worry-free."
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A sold sign is shown in front of west-end Toronto homes Sunday, April 9, 2017. (Graeme Roy/The Canadian Press)
"It may be not as favourable (to sell), but when I go to buy, there's an advantage there."
The decline in property transactions was driven by fewer sales of detached homes in Toronto and its surrounding areas, the Toronto Real Estate Board said.
The average selling price of all properties in July was $746,218, roughly triple what it was when Alker bought her home and up five per cent from the same month last year.
But that's down nearly $175,000 since April, when the Ontario government introduced more than a dozen measures -- including a 15 per cent tax on foreign buyers -- aimed at improving home affordability.
Tim Syrianos, president of the Toronto Real Estate Board, said the decline in activity has less to do with foreign buyers and more to do with potential homebuyers waiting to see how the market plays out.
"Clearly, the year-over-year decline we experienced in July had more to do with psychology, with would-be home buyers on the sidelines waiting to see how market conditions evolve," Syrianos said in a statement.
Sal Guatieri, a senior economist with BMO Capital Markets, said Toronto's housing market is starting to come back to normal levels after going through a "frenzy" early this year.
"Buyers are stepping back, there's more sellers, and that just seems to be contributing to greater downward pressure on detached home prices in the Toronto region," said Guatieri.
"That was just not sustainable and certainly not healthy, and greatly increased the risk of a severe correction if economic circumstances changed."
A year ago, foreign buyers in Vancouver also had to pay a 15 per cent tax. The effect was immediate: the number of transactions tumbled in the ensuing months. However, Vancouver did not see the plunge in prices Toronto is now experiencing.
Tom Storey, a sales representative with Royal LePage, said he believes Toronto's market will rebound much like Vancouver's did.
"If you cross-reference what happened in Vancouver after the (foreign buyers' tax ) announcement, they went through four-to-six months of people cooling down," said Storey. "Then it ramped up again."
Guatieri said it's worth noting that while detached housing was what drove the drop in sales, condo sales have remained strong, helped in part by their relative affordability.
"But I wouldn't be surprised if we see a little bit of cooling in that department in the next few months," he said.
The average price of condos throughout the GTA in July was $501,750, an increase of 23.2 per cent from a year ago. Detached homes on average sold for $1 million, up 4.9 per cent.
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