“What is going on?”
So, lots of nervous buyers and sellers right now. Lots of clients asking me “What the heck is going on?” Here’s my analysis:
The Timeline It all started in April when there began to be talk about government changes. Buyers, worn out from a difficult March, started getting nervous. Sellers started getting nervous too and were racing to put their place on the market. There were 33% more homes listed than the same time last year. The Ontario Fair Housing Plan came out April 21st and it should not have had that much effect, but when the media starts yelling that the sky is falling, people are going to freak out a bit. The fall of the Home Capital Group at the same time made people even more nervous. People worried that we were in for an American style bubble pop. There is a lot of chatter right now about the Ontario Securities Commission’s timing on their statement of allegations about Home Capital which caused the fall. As well, March Break and private school’s Spring Break were late this year and people were holding off on listing their homes. All these events combined to create this current slowdown.
What Happened Showings started to go way down on homes for sale. Some great homes were being overlooked. In cases where sellers had to sell, buyers were starting to make some great deals. What once was a bidding war turned into crickets on offer night with no one showing up at the table. Lots of homes were starting with a low asking price and when no one came on offer night, they had to re-list at the price they needed to get in order to sell. This is all still going on right now.
Love My Stats In my general Central Toronto neighbourhood, detached homes in the combined areas of Lawrence Park, Lytton Park, Forest Hill, Rosedale, Leaside and Thorncliff Park had 191 listings in April 2017 compared to 133 in 2016. 153 homes sold in an average of 10 days with an average price of $2,801,268 in April in that same area compared to 107 homes sold in an average of 13 days with an average price of $2,350,123 in April of last year, that’s a price increase of 19%. Even May so far to date (May 19th, 2017) has had 72 homes sold in an average of 13 days with an average price of $2,760,146 compared to May of last year up until the 19th, when 74 homes had sold in an average of 13 days with an average price of $2,268,334. That is still an increase of 22% from last year. Another interesting fact, there were 122 new listings in April 2017 up 22% from 100 new listings in April 2016. New listings are down in May to the 19th by 71% from 72 homes last year to 42 homes this year. Interestingly, for both months combined, we are still down by 4.7% so inventory is still down comparatively.
What this means for you All the experts I’ve heard talking about this have said they expect things to be back to normal by the fall or even sooner. There isn’t really anything fuelling this slow down, it seems to be just perceived. The spectre of rising interest rates is approaching too so now is a great time to buy. Really lovely homes are seeing offer dates come and go while buyers wait and see. I predict that what will happen is things will go right back to business as usual. If May’s trend continues with homes being pulled from the market, supply will dry up again and we will have the same market as before with bidding wars and price increases. The thing that will slow things down is rising interest rates. Now is a great time. Don’t try to time the market, even if you are buying at a low or high for the market. Over time Toronto real estate has proven to be an excellent investment but it is first and foremost a wonderful place to live and raise a family. If you are buying and selling at the same time, it evens everything out. Sellers, don’t worry, you are still doing well too, An increase of 22% from last year is a great return on your money. My recommendation to sellers is to not wait for offer day if you get a good bully offer. Start thinking about maybe selling your place before you buy. Whether you are buying or selling, use an expert who knows the market well and who has your best interest at heart.