Canada's Condominium Magazine

Sellers rushing to cash out? Listings up 32% April while prices increased Nationally an average of 10 % over the last year

The impact of the Ontario Government “Fair Housing” rules is starting to be felt, manifesting in the move of some sellers to list their properties – likely to “beat” the  anticipated moderation of prices. Based on Vancouver’s experience with similar rules, economists aren’t expecting a major cool down, and almost certainly a short one.

 

Toronto and GTA markets show signs of moderation with an increase of new listings into the market.

 

The numbers in Toronto tell a story, but it can be spun different ways:

  • 32% increase in listings
  • 10% increase in prices Nationwide (significantly more in Toronto)
  • 5% decrease in sales

“Homebuyers and sellers both reacted to the recent Ontario government policy announcement aimed at cooling housing markets in and around Toronto,” CREA’s chief economist Gregory Klump said. “It suggests these housing markets have started to cool.” [1]

The average Canadian price increase to $559,317 in April, however if the two hottest markets were dropped out of these numbers — Toronto and Vancouver — the National average price drops more than $150,000.

 

 

Highlights from CREA for April 2017

  • National home sales fell 1.7% from March to April.

  • Actual (not seasonally adjusted) activity in April was down 7.5% from a year earlier.

  • The number of newly listed homes jumped 10% from March to April.

  • The MLS® Home Price Index (HPI) was up 19.8% year-over-year (y-o-y) in April 2017.

  • The national average sale price rose 10.4% y-o-y in April. [2]

Seller good news? Buyer good news?

One of the core causes of the too-rapid price increases was shortage of supply. The increase in listings, likely in response to the new rules in Ontario, will likely moderate market pricing.

Why is this good news for Sellers? Increases in listings may not encourage multiple offers (or at least not as many), but a moderated market is also less likely to experience a hard crash. Slight corrections, then steadier, slower gains is better for the overall health of the market.

Why is a good news for Buyers? It should help make home prices more affordable. At the very least, the end of multi-bid auctions will reduce buyer stress when they find out — over and over — their bid failed. Or, if they succeeded, they paid too much.

Stability in the market, steadier gains and a few corrections are all healthy. Precipitous increases invite dramatic drops. So far, the report card for Ontario is not a fail.

Sellers: no need to panic

In Vancouver, after similar government interventions, the market certainly slowed, but they have now risen 20% in the first quarter of 2017, bouncing back, but with prices in control. Just as appears to be happening now in Toronto, sales dropped and prices continued to rise for a short period.

Peak prices might have passed, but sellers aren’t going to lose money. Real estate agents can take the odd weekend off. With cottage-buying seasons upon us, a moderated vacation property market is also welcome.

Listings growth by Ontario market

Surprisingly Orangeville is strongly leading all other areas in new listings:

  • Orangeville up 45.2%
  • Durham Region up 41.8%
  • Greater Toronto up 36%
  • Mississauga up 35.7%
  • Peterborough up 32%
  • York Region up 39.9%
  • Barrie up 23.2%
  • Oakville Milton 21.8%
  • Kitchener-Waterloo 18.3%
  • Brantford 17.5%
  • Niagara Falls 14.5%
  • Cambridge 10.3%
  • Catharines 7.4%
  • Welland 7.2%
  • Hamilton-Burlington 6.8%
  • Northumberland Hills 3.1%
  • Guelph 3.1%

 

NOTES

[1] “Average Canadian house worth $559,317 last month, up 10% in past year” CBC.ca

[2] CREA “Canadian home sales drop in April”

 

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