Sales and prices are down
Stats from January of this year paint a difficult picture for GTA real estate. The Toronto Real Estate Board outlined that sales stats fell 22% to just over 4,000 units in January 2018. Unit sales were the weakest since Jan. of 2009. Furthermore, the average home price fell to just over $736,000.00, a 4% decline from similar figures in Jan. of 2017. Sale prices are now back to late 2016 levels, with the recent saga of changes having evaporated the blockbuster gains of 2017.
Media call it a correction, blame government measures
The media are broadly calling these reductions in prices and sales a ‘correction’, and they blame federal government-imposed stress tests, higher interest rates, and a reduction of foreign demand because of a provincial foreign buyers tax as chief causes for the reduction so far this year. The market was bracing for difficult conditions and cold stats given the vast swath of changes which have been introduced and the aforementioned stats reinforce and outline these difficult conditions. Stress tests alone essentially wiped out 10% of potential buyers, by simply elevating the difficulty of qualifying for financing.
Jan. stats within the broader picture
While tough for sellers and many real estate professionals, the above statistics, if analyzed within a broader context of the past several years, are but brief negative blips. In mid 2014, as little as four years ago, the average sale price for a home in the GTA was roughly $550,000.00. Prices have increased by 50% on average in just four years. A 4% reduction in average prices is a miniscule reduction.
Real estate still strong, and conditions should improve
The condo market is on fire. Demand remains reasonably healthy. The economy continues to grow, and immigration remains high. Rental vacancies are at historic lows. As winter turns to spring, the real estate market should heat up and the broader community will acclimatize to stress test changes and gradually higher interest rates.