In a previous blog post, Tembo outlined current real estate trends which are benefitting buyers and shifting the market into a more balanced position. Whereas previously very high prices and price growth, massive demand, and low inventory assisted sellers, market trends are continuing to move in favour of buyers. According to recent data from the Canada Mortgage and Housing Corporation, the housing supply is increasing and will continue to increase because of large-scale construction projects which will come on the market shortly.
The latest Toronto Real Estate Board data shows that house sales in June plummeted by over 37%, the largest fall in sales since the 2009 recession. Sales of single-family homes fell 45%. Although sales have been falling for three straight months largely due to government regulatory and legislative changes, prices continue to rise with a 6.3% increase recorded since January 2015. New listings also increased supply, with the number up to 19,614 units. With the number of foreign buyers declining, supply continues to increase, and price growth cooling, market trends continue to favour buyers.
Projections should keep sellers optimistic
The Toronto Real Estate Board remains optimistic that prices will continue to increase over the long term, albeit not as dynamically as in previous months. Detached home prices increased 7.8% to 1.06 million in June, and composite prices are still increasing. TREB believes overall annual sales will hit 89-100,000 units in 2017, down from roughly 115,000 last, year. The Board is also projecting an increase in listings of roughly 23%.
Confluence of factors impacting the market
Troubles with large mortgage lenders, a new foreign buyer tax and increasing speculation that the Bank of Canada will soon increase interest rates are all forces which are cooling the market. Underlying market fundamentals remain strong, however, and even as supply and demand cool, prices continue to increase, especially for detached homes. Overall, the real estate market is responding to the needs of consumers and adjustments offer both positives and negatives to both buyers and sellers.