As we move forward through the summer months, the market continues to adjust. With listings increasing and sales declining, the real estate market continues to shift towards a buyer centric market.
The Toronto Real Estate Board reported that there were 14,171 new listings added in July, a 5.1% increase over the last year. Active listings also increased year over year by 65.3% to 18,751. The year over year numbers tell one story, the month over month numbers tell another. Comparing July to June we noticed a 28% decrease in new listings and a 5% decrease in active listings. This decrease could be the beginning of the market starting to trend in the right direction.
Greater Toronto Area REALTORS® reported 5,921 sales in July, a 40.4% decrease year over year. However, when we look at month over month sales we notice that the overall trend is similar. From June 2017 – July 2017 there was a 26% decline in sales volume. When this is compared to June 2016 – July 2016, we notice a decline of 22%. Looking at year over year numbers must be taken with a grain of salt as numbers can be exaggerated due to different market conditions.
Summer months historically are not the best indicators for housing market conditions. We generally see a slight increase in sales following Labour Day. In the Fall, we will get a better sense of the market as this is generally the time of year when buyers and sellers consider listing and/or buying a home.
The average price for all types of homes in the GTA was down by 6% to $746,218 when compared to June 2017 where the average price was $793,915. A silver lining to all this is that the average selling price of all home types continues to be higher year over year. During the month of July, the average price for all homes was $746,218, a 5% increase over July 2016.
The recent changes in the sale and price trends have masked the fact that housing supply remains an issue in the GTA. Closer to home in Markham, Unionville, Stouffville and surrounding areas we are seeing an ample supply of inventory. For example, detached homes in Markham and Stouffville are currently sitting with enough inventory to last 5.2 months and 7.5 months respectively. Making both of these markets balanced in nature. This abundance of inventory has allowed for buyers to remain on the sidelines and be more selective.
What Does This All Mean?
The market continues to be fine-tuned over the summer. In July, the Bank of Canada raised its interest rates by 0.25%, with the possibility of another hike coming in September. News also broke that the Office of the Superintendent of Financial Institutions said it plans to require home buyers who do not need mortgage insurance (those with down payments greater than 20% of the purchase price) to prove they could still afford their mortgages even if interest rates were two percentage points higher than the rate they are offered by their bank.
We are finding that the market is starting to normalize and move towards a more balanced market, even though the shift that is occurring might seem significant. Remember what we saw in the earlier part of the year and most of 2016 was not a typical market. It was more of a hyper aggressive seller’s market. What we are transitioning to now, should be expected for the foreseeable future.