James Hughes Salesperson, REALTOR®

James Hughes Salesperson, REALTOR®

March Update

March GTA Update

 

 
 

February stats are out. Let’s take a look to see how the GTA market is looking now.

Just a quick disclaimer, the market is still recovering from a very drastic change from last year. Looking at year-over-year percentages prior to the Fair Housing Plan in April 2017 will give you a flawed indication of the current market. Prior to April 20th, 2017, there were record high resale prices and record low inventory. Its important to look at the month to month changes and 10 year average when judging how the market is actually doing.

Sales

GTA REALTORS® reported sales of residential transactions through TREB’s MLS® System are down 34.9% year-over-year from February 2017. This sounds bad because of the record highs in recent years but sales are trending up as we get into the spring market.

                                               

New Listings

The number of new listings entered into TREB’s MLS® System are up 7.3% compared to the 9,801 new listings entered in February 2017. However, the level of new listings remained below the average for the month of February for the previous 10 years. Notice below that new listings in 2017 were right around average for previous years until April, May and June when they spiked up. This was one of the main contributors to the “crash” experienced last year. Everyone wanted to sell at a time when few were buying. Looking at December, January and February this year, growth looks stable, hopefully indicating the same for resale prices as we head into spring.    

 

                                            

Resale Price

2018 will be an interesting year for sure.  The stress test is sure to affect affordability for anyone with more than 20% equity or down payment. This will likely cause higher demand for the more affordable homes like condos, towns and semis while the larger, more expensive detached homes will have a bit more difficulty selling. Average resale price is a combination of all types of sales and since this year will likely be led by more inexpensive homes, the average resale price should have a much more slow and stable growth.

The overall average selling price for February sales was down 12.4% year-over-year to $767,818. However, if you disregard the anomaly that was 2017, you’ll notice February’s average price remained 12 per cent higher than the average reported for February 2016.  This indicates an annualized increase well above the rate of inflation for the past two years, leading me to believe we might be back on track for a more balanced market and stable growth in 2018.

 

                                            

Other factors

Supply and Demand – This was likely the main reason for the sky high prices as well as the crash. Too little inventory spiked the prices in the first quarter of 2017 and too much inventory, coupled with little demand caused the prices to fall drastically. The Fair Housing Plan did not address the problem but just create waves so the lack of supply likely still exists. With the market getting back into a normal routine, we could start to see a lack of inventory playing a factor again.

Stress Test - All we know right now is that anyone looking to buy, extend credit or renew with a different federally regulated lender will be subjected to this stress test. It's only been in place for the majority of people in January and February 2018, historically slow months. We'll just have to wait and see just how great of an affect this will have on the market.

Mortgage Rates - The bank of Canada did not increase rates on March 7, 2018, likely due to the amount of economic uncertainty surrounding Canada with regards to NAFTA. Having said that, Canadians have experienced three 0.25% rate increases over the past few months. Some homeowners may have been hurt by this and buyers are surely feeling it as they will need to be pre-approved with a higher interest rate AND the stress test.

Stay tuned for updates as we get closer to spring. Fingers crossed for a healthy market this year! Don't hesisate to call, text or email me anytime with any of your real estate needs. And I'm never too busy for your referrals!

 

 

Other Articles:

Should I Buy Brand New or Resale?

What's In Store For 2018? 

Financial Tips For First-Time Buyers

 

 

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