As many buyers and sellers took a pause to see how the Fair Housing plan will affect the market, September was expected to bring some clarity and possibly set a trend for the upcoming months. Will the GTA real estate market pick up after a summer lull or will the downtrend continue? Let's have a look at the numbers and see.
The sales plummeted by 35 percent compared to September 2016 and amounted to 6,379 properties sold. The inventory increased significantly by 9.4 percent year-over-year. Toronto Real Estate Board President Tim Syrianos suggested that the sellers are "anticipating an uptick in sales activity " and therefore listing their properties.
The average price in September 2017 reached $775,546, which represents a very moderate price growth year-over-year of 2.6 percent. The only exception is the condominium segment, where the prices soared by more than 20 percent compared to September 2016. The average prices have also gone up by 5.9 percent compared to August 2017, which indicates a slow upward trend in the GTA real estate market.
What is most interesting about the stats from the Toronto Real Estate Board for September 2017 is that even though the number of total transactions is down 35 percent, the prices in Condominium resale market went up 20 percent.
This strikes me as poignant proof that Toronto has transitioned from a mostly residential housing market to a mostly condominium market. With the number of multiple offers we are seeing in the rental market, I foresee the next major changes going forward will be a New York Style of life where city-renting and country-ownership will become more of a norm.
The mood of buyers has taken a big swing from the start of this year (fear of missing out and paying a premium to secure a sale over competing buyers) to the summer (fear of buying and seeing the value of the property drop even further). One end of the spectrum to the other in 6 months! Classic herd mentality and Behavioral Economics at play here.
The interesting stats to glean from this report are that the "416" market has fared much better than the "905" market in all housing categories save and except the townhouse category, even in a decreasing sales environment. What is at play here is the old adage; Location, Location, Location. Your real estate equity is always more secure in prime and sought after locations in the GTA.
The most common question we are being asked by Sellers on our listing presentations is "is it a good time to sell?" There has been much speculation and real estate is very newsworthy right now which is also adding to the confusion of Sellers and Buyers. I have had clients ask why in the last two weeks have properties sold over asking or sold in less than a week when they are reading that the market is dead or down by 3 percent.
The increase in listings does show that Sellers are starting to feel more confident. Whilst the interest rates have increased recently, those buyers that put their rates on hold before the rates were increased are very keen to buy and anxiously waiting for more product. The fire that was burning in the Spring is not out but has simply gone from a roaring fire to a flickering one. Yes, there have been changes and likely more to come but isn’t change often for the better?!
Recent numbers from the Toronto Real Estate Board indicate a decrease in total sales by 35 percent. Some of the biggest contributing factors to this slowdown are unrealistic sellers, the climb of the interest rate, market uncertainty and buyers shifting to renter status.
Sellers today are still holding on to market expectations from earlier in the year, correctly priced properties account for the 65 percent sold last month. With interest rates already up twice this year and a potential third time this month, affordability is affected and therefore, buyers are less likely to throw their money around.
The current changes in the market with the rates rising and sales activity slowing down buyers are still holding their breath unless there is a perfect alignment. Some buyers have shifted to renting for a year and seeing what happens and this is why we are seeing a bigger demand than ever for rental properties. This is a tricky time, however, there is potential to navigate this market perfectly and we seem to be doing just that with our buyers and sellers.
Despite the downturn in the resale market, new development sales are still strong. This just shows how confident we are in the strength of our future real estate market.
The 905 area suffered the most since the fair housing plan has been introduced. However, it has been slowly recovering since the beginning of September. The number of showings increased way more than during summer months. Buyers and sellers are now actively seeking opportunities in the marketplace.