In the midst of the general real estate market cooldown there is a bunch of positive news out there: the supply is finally increasing, luxury property sales are going up and a lot of Toronto families can afford $1M+ home. Here are some of the good reads this week from Torontoism.
Good news for buyers – the number of active listings at the end of May 2017 was up by 42.9 per cent compared to May 2016. Detached and semi-detached properties experienced a considerable increase in listings, while condos were down compared to May 2016. Torontoism team highlights great opportunities for buyers. However, as Jim Burtnick notes, the market activity is likely to pick up soon he also suggests that the current situation is just an adjustment back to a more “normalized” marketplace.
OREA CEO Tim Hudak talking about the propositions that Ontario realtors made to increase the real estate supply and affordability of housing in GTA. Some of those points have successfully found their way into the government’s Fair Housing Plan. The recommendations included speeding up the home developments approvals, improving infrastructure in housing-ready areas, fixing the outdated restrictions on the “missing middle” housing types, higher requirements for the level of realtors’ professionalism and protecting those who live in Ontario and contribute to its well-being from the foreign buyers’ tax.
OREA’s CEO insists that the market slowdown is temporary and related to the buyers’ and sellers’ expectations. The lack of housing is an ongoing trend and it is caused mainly by the lack of supply, he emphasizes.
To say that Toronto families cannot keep up with the prices at the current levels has become a banality. However, this statement is hardly supported by the statistics. The numbers show that there is a good chance that the market can be supported by local incomes. In 2016 alone there were 19,318 sales over a million dollars, which represents 17 per cent of total sales in the whole TREB region.
To support a million dollar home, the family needs to make at least $150,000 per year. According to Statistics Canada’s latest income release, 11 per cent of households in Toronto made over $150,000 in 2015 after tax. That means there’s 264,110 families able to buy a $1M+ home last year. However, there are still a lot of families which are much worse off, and the incomes are quickly polarizing, so there are still people who have trouble finding a shelter.
The Globe and Mail: Toronto’s housing market: Sustained chill or Vancouver-style rebound?
The average sale price dropped by 6.2 per cent in May compared to April and the number of home sales fell 12.3 per cent. The question is if the market slowdown will last. Similar drop in prices happened before in Vancouver after the introduction of similar foreign buyers’ tax, and the prices there have gone back to previous levels in about 8 months. In May, average sale prices for detached homes, condos and townhouses in the Vancouver area hit record highs again. It is estimated then, that if Toronto real estate market follows the same trends, the prices will have rebounded by December 2017.
Even though it’s just a tiny slice of Toronto’s property market, luxury real estate is on the rise, with a 62.5 per cent increase in Toronto-area properties selling for more than $4 million, despite the overall cool down of the market.
It is considered that the buyers of luxury real estate might have a deeper understanding of the market and its temporary fluctuations which do not change the long-term trend. Another explanation might be that the rich buyers are less sensitive to the price changes once they hit the $4 million mark. In any case, the foreign buyers tax has not slowed the luxury real estate market.