Photo: James Bombales
GTA new home listings have been trending downward ever since 2012, and there is one explanation for the drop that most industry experts aren’t considering.
According to a new report from Realosophy president John Pasalis, there have been 120,000 GTA new low-rise homes completed in the last 10 years, but new listings have continued to drop on a year-over-year basis.
“While it’s very difficult to pinpoint a single explanation for this trend, one possible explanation can be seen by looking at how the number of rental listings for low-rise houses have changed over the same period,” he writes.
Housing Market News Alerts
Sign up now for news alerts on the Canadian housing market
Since 2012, the number of GTA properties listed for rent has more than doubled, which Pasalis believes could mean that single-family homes owned and rented by investors have also roughly doubled.
He argues that one possible explanation for the decline in new listings is the rise of homeowners choosing to hold onto their existing home as a rental property when buying their second home.
“The idea is that we did see a lot of this anecdotally leading up to the market peak [last spring,]” Pasalis tells Livabl. “While it’s not a huge number that could be enough to tip the scale [of new listings,] it could be part of the explanation.”
Now that home prices have flattened out, Pasalis says it will be interesting to see if the downward trend in the number of new listings continues.
“I do think we could see it start to reverse somewhat, as people will be less likely to hold onto their original homes, now that the market is less volatile,” he says.
For more insight into the GTA housing market, check out this video with Pasalis below, where he explains how the mortgage stress test impacted condo prices in 2018.