Toronto’s Housing Market This Spring
Spring is always the season that sees a booming rise in home sales after slow sales in winter. However this year things are different in Toronto. The home sales have been going down since January, but experts are optimistic that the market will rebound back this spring.
Home sales dropped by a staggering 35% from last year, with prices falling by 14%. Although the year-on-year comparisons have seen a drop, month-on-month comparisons tell a different story. There has been a steady increase in the housing market. The listings have been increasing, and there has been steady growth in demand and price. Jason Mercer, the Director of Market Analysis in TREB, argues that it is impractical to compare last year’s housing market and this year’s market. This is because last year there was less than a month of inventory, while this year there has been more than 2 months of inventory.
The drop in the market has largely been attributed to the stringent measures put up by the government. These are the implementation of a fair housing plan in April 2017 where foreign nationals pay 15% tax on housing purchases, the increases in mortgage rates implemented in January 2018, and the tightening of mortgage regulations. Mortgage regulations now require banks to offer an OSFI-stress test to potential borrowers to see if they can afford the high mortgage rates. Buyers aren’t buying, and sellers aren’t selling. Homeowners are holding on and waiting for the prices to go up. Another factor that has attributed to the drop is the electioneering period. The election is only a month away and analysts are forecasting that sales will increase in summer after the elections.
Despite the general drop in the housing market, there has been a steady increase in sales of condominiums. The downtown condo market is experiencing a double-digit sales and high price sales. Condo sales went up $43,000 in March versus January, with this growth expected to continue during spring. Experts predict that there will be a 6.8% increase in the price of condos by next year. Prices will rise as the demand rise. The price of detached houses, on the other hand, has experienced a 17.2% drop in price, with the numbers sold reducing by 41.2%. With the increase in demand for the condos, the price and sales of detached homes are expected to drop further. This rise of the condos sale is majorly due to the fact that they are cheaper and affordable as compared to the detached homes. Another reason for this rise is that buyers are willing to trade the high upkeep of the indoor and outdoor space that the detached family home offers, for something more stylish like condos.
By Ryan Condominiums.ca Contributor