Photo: James Bombales
New data suggests the Greater Toronto Area’s resale housing market is cooling as Ontario’s Fair Housing Plan sets in — but what about demand for brand new homes?
“It’s full steam ahead with pre-construction,” says BuzzBuzzHome President Matthew Slutsky.
Existing home sales nosedived by 20.3 per cent year-over-year in May as new listings soared 48.9 per cent, according to data published today from the Toronto Real Estate Board (TREB).
But Slutsky isn’t seeing a similar response to the Fair Housing Plan, which includes a Vancouver-esque foreign-buyer tax, in the pre-construction segment.
Underscoring persistent demand for new homes, Slutsky pointed to the market’s response last month to the launch of Transit City, a high-rise condo community from CentreCourt Developments coming to Vaughan.
“We’ve seen Transit City in Vaughan selling very quickly at $700-plus per square foot,” says Slutsky. “Over a thousand realtors lined up for the opening which was unprecedented for the area,” he adds.
Sales have also been strong at other recently launched large-scale condo projects, such as Daniels Waterfront by Daniels and Lanterra’s Artists’ Alley on Simcoe Street have also reported strong sales, Slutsky notes.
“There’s clearly still no shortage of interest from buyers in Toronto’s new construction market at this point despite the notable slowdown on the resale side,” he explains.
That slowdown was also visible in terms of pricing. The average resale price of a GTA home last month was $863,910, up 14.9 per cent from a year ago but down from April’s average of $919,614, the current peak.
In fact, month-over-month declines were recorded for each housing type that TREB tracks pricing for, although prices were still way up from last year in each case.
Meantime, sales data for the GTA’s new-build housing market are expected later this month from the Altus Group.
Benjamin Reitzes, a strategist at BMO, says “there’s little doubt” the Fair Housing Plan measures affected resale activity in particular last month.
“Foreign buyers have likely pulled back, while domestic buyers appear to have [stepped] back as well to see how the changes shake out,” he writes in a note.
“And, the surge in supply should help balance the market as well, as those holding out for better prices, or just trying to take advantage of high prices, are trying not to miss out,” he adds.
Jason Mercer, TREB’s director of market analysis, suggests it’s too soon to see the true impact of Ontario’s 16-point policy, which was announced on April 20, making May the first full month of activity in its wake.
“The actual, or normalized, effect of the Ontario Fair Housing Plan remains to be seen,” says Mercer in a statement.
He says the rise in active resale listings — that’s the number of existing homes on the market at the end of a month’s final day — suggests homeowners are starting cash out in larger numbers.
There were 12,931 active listings at the end of May, up 42.9 per cent compared to the same time last year.
Robert Hogue, a senior economist with RBC, welcomed the response from buyers and sellers, writing “this was pretty much the whole point” of Ontario’s Fair Housing Plans.
“Don’t be surprised if the Toronto-area market moves into a buyer’s market territory in the coming months,” he adds in his response.
Hogue says this development, the result of more listings and fewer sales, wouldn’t indicate a looming, sudden collapse in pricing. “It would in part simply be a reflection of changing sales tactics in the face of more patient buyers,” he explains.
“We continue to expect that the next phase in the market will be a soft rather than hard ‘landing.’”