Photo: James Bombales
You could say that real estate in the Greater Toronto Area is the tale of two markets: the rampant activity of 2016, when sales and prices hurtled towards their peak, and today’s post-Ontario Fair Housing Plan reality.
It’s no secret that market conditions have swung wildly following the implementation of the 16-part plan, which targeted home prices via taxes on foreign buyers, speculative investing, and even empty homes. But just how much have prospects changed for today’s buyers and sellers?
A Better Time to Be a Buyer
New mid-month metrics from online real estate brokerage and resource Zoocasa reveal how the market has evolved over the long and short term – and indicate it’s currently a better time to be a buyer, according to mid-October’s sales-to-new-listings ratio.
This metric, which is calculated by dividing the number of home sales by new listings within a specific time frame, gauges the level of buyer demand in a given market. According to the Canadian Real Estate Association, a range between 40 – 60 per cent is considered balanced, while ratios below and above are buyer’s and seller’s markets, respectively.
In the GTA, the market has effectively flipped from seller’s conditions to buyer-friendly, with the ratio plunging by nearly half to 36.2 per cent, from 68.2 per cent in 2016. While buyer conditions are slightly tighter within the City of Toronto – which fell from a ratio of 68.3 to 41.9 per cent – the Big Smoke remains firmly in balanced territory overall.
The infographic below illustrates how mid-October sales, new listings, and the resulting ratios have changed per home type, year over year:
A Look at Mid-Month Trends
However, to truly assess how the dust is settling on a softer Toronto market, a look at month-over-month change provides the best insight. Mid-October numbers reveal some home types are seeing a quicker uptick in demand, while new supply shows signs of slowing, all of which could lead to a reheating market.
A Recovery in Detached Demand: Single-family house sales have seen the greatest decline over the past year; September numbers from the Toronto Real Estate Board revealed a 41-per-cent year-over-year drop. However, that report also indicated that buyers were perhaps returning to their house ownership ambitions, as sales had improved 8 per cent from August. That trend has continued into October, with sales relatively flat within the city (0.93 per cent), and up 11.1 throughout the GTA when compared to half of September’s total activity.
It also appears that seller anxiety, which fueled a surge of detached listings in the spring market, is calming; there were 22.4 per cent fewer houses listed for sale in the first half of October in the 416, and an increase of just 0.67 per cent throughout the total GTA. That sales are improving despite stubbornly high average GTA house prices ($1,1015,067 as of September), could be attributed to a combination of motivated autumn buyers who want to wrap up their purchase before the holiday season, and those who want to squeeze in mortgage financing before new OSFI stress testing rules take effect in January. It’s expected that buyers of higher-priced homes with larger down payments will be most affected by the changes, which will require qualification at the Bank of Canada’s rate of 2.89 per cent, or at an additional 2 per cent on the contract rate – whichever is higher.
Fewer condo and townhome sales: Another mid-month finding shows lower-priced home types are seeing less demand than other reports suggest. Sales for Toronto condos are down 33.4 per cent within the 416 compared to mid-September. While there were 11 per cent fewer units listed for sale, that drop was enough to soften the sales-to-new-listings ratio from 48 to 41 per cent.
The Toronto townhome market, however, has seen the greatest decline with sales falling by a whopping 47.8 per cent in Toronto and 62.1 per cent throughout the GTA. This could be due in part to shorter supply, as 15 per cent fewer listings came to market compared to mid-October 2016.
Penelope Graham is the Managing Editor of Zoocasa.com, a leading real estate resource that combines online search tools and a full-service brokerage to empower Canadians to buy or sell their homes faster, easier and more successfully. Home buyers can browse Toronto real estate listings, including townhouses, detached homes and condos.