News has been trickling in over the past few days of significant drops in sales across the GTA. Although this is true, it is only one piece of the puzzle. The Toronto Real Estate Board reported 10,196 sales through May 2017. A 20% decline in sales volume compared to May 2016, which saw 12,790 sales. All types of homes saw a decline in sales during the month of May.
- Detached – (-26.3%)
- Semi-Detached – (-22.7%)
- Townhouse – (-18.1%)
- Condo Apartment – (-6.4%)
The average price for all types of homes in the GTA was down by 6% to $863,910, when compared to April 2017 where the average price was $920,791. The good news is prices are still up from May 2016 when the average price was $752,100.
Buyers definitely benefitted from a better supplied market in May. Both New listings and Active listings saw an increase when compared to May 2016. New listings increased by 49% and active listings grew by 43%. May 2016 saw the lowest level of active listings in the past 15 years. This large discrepancy has over sensationalized the increase of active listings. When compairng the stats to April 2017 we see new listings increased from 21,630 to 25,837, an increase of only 19%. While reviewing active listings we see that April 2017 had 19,926 active listings and May had 18,477, a decline of 7%. A significant portion of the increase of new listings came from low-rise home types including detached and semi-detached homes and townhomes.
Even with the robust increase in active listings, inventory levels remain low. At the end of May, we still had 1.1 months of inventory. Remember, a market is considered balanced when it has 5 months of inventory and prices have stopped increasing rapidly.
What Does This All Mean?
The full effect of the Ontario Fair Housing Plan remains to be seen. In the past, some housing policy changes have initially led to an overreaction on the part of homeowners and buyers, which later balanced out. The increase in active listings suggests that homeowners, after a prolonged delay, are starting to react to the strong price growth that we have seen over the past year by listing their home to take advantage of this growth. With more homes on the market this has amplified the decline in price and buyers are taking full advantage of this opportunity.