Market Watch - Canadian Real Estate has entered the buyers’ market territory
Rising interest rates and stricter mortgage requirements have reduced home buyers’ purchasing power, particularly for those at the entry level of our market, the supply of apartment and townhome properties for sale today is unable to meet demand. On the other hand, the detached home market has entered the buyers’ market territory.
This is a market where the fundamentals of a sound pricing strategy need to be understood by sellers. At the same time, potential purchasers should be obtaining mortgage pre-approvals so they understand exactly what they can afford prior to making an offer on a home. It also provides the flexibility in this market.
Ontario – Sales down by 39.5% compared to last year.
Toronto, April 4, 2018 -- Toronto Real Estate Board President Tim Syrianos announced that Greater Toronto Area REALTORS® reported 7,228 residential transactions through TREB's MLS® System in March 2018. This result was down by 39.5% compared to a record 11,954 sales reported in March 2017 and down 17.6% relative to average March sales for the previous 10 years.
The number of new listings entered into TREB's MLS® System totalled 14,866 – a 12.4% decrease compared to March 2017 and a three% decrease compared to the average for the previous 10 years.
"TREB stated in its recent Market Outlook report that Q1 sales would be down from the record pace set in Q1 2017," said Mr. Syrianos. "The effects of the Fair Housing Plan, the new OSFI mandated stress test and generally higher borrowing costs have prompted some buyers to put their purchasing decision on hold. Home sales are expected to be up relative to 2017 in the second half of this year."
The MLS Home Price Index Composite Benchmark was down by 1.5 percent on a year-over-year basis for the TREB market area as a whole. The overall average selling price was down by 14.3% compared to March 2017.
While the change in market conditions certainly played a role, the dip in the average selling price was also compositional in nature. Detached home sales, which generally represent the highest price points in a given area, declined much more than other home types. In addition, the share of high-end detached homes selling for over $2 million in March 2018 was half of what was reported in March 2017, further impacting the average selling price.
"Right now, when we are comparing home prices, we are comparing two starkly different periods of time: last year, when we had less than a month of inventory versus this year with inventory levels ranging between two and three months. It makes sense that we haven't seen prices climb back to last year's peak. However, in the second half of the year, expect to see the annual rate of price growth improve compared to Q1, as sales increase relative to the below-average level of listings," said Jason Mercer, TREB's Director of Market Analysis.