Canada's Condominium Magazine
“Tighter housing policies have helped to kick-start a soft landing in the GTA housing market, while gradually rising interest rates later this year are likely to help solidify it.” — TD Bank Economists Michael Dolega and Diana Petramala
The “soft landing” was the elusive goal of the Ontario government sought with new “Fair Housing” rules recently introduced. [Refer to this feature covering those rules>>] The reaction in the market was quick, but moderated. There hasn’t been a harsh adjustment, and, according to TD Economists, they expect a very soft landing.
“Overall, the adjustment in the GTA reflects lessened investor activity, and should offer a better opportunity for first time home buyers who now face more choice and fewer bidding wars,” writes Dolega and Petramala in their research report.
Soft landing and balanced seller-buyer market?
They also predict “a soft landing” that “should see sales return to their longer run trend, while price growth decelerates more in line with underlying income growth.” The sought for balance, a market good for both seller and buyer, is in sight.
The economists indicate “The average home price is now on track for a 12% gain this year, or somewhat lower than the 15% we were anticipating in April. Average prices in the GTA are also on track for a 4% decline next year, largely in line with the 3% decline expected in the Greater Vancouver Area (GVA) this year.”
Toronto home sales, according to TREB, fell 20.3% in May, and although prices dropped month-over-month from $920,791 (April) to $863,910 (May), they are still up year over year. Listings have also increased, relieving some of the pressure in the market that was excluding some buyers.
The economists describe the scenario as a “welcome cool-off,” and compare it to the similar cool-off in the Vancouver market previously when similar rules were brought in.