May Market Update
May numbers are in and GTA sales are down 22.2% from last year. This is still a steady improvement month over month as April, March and February had greater than a 30% drop each month. This should be the last time we see a double digit drop in sales from 2017. Sales are still far below averages for the previous 3 years but at least 2018 appears to be stable.
The GTA had an average sale price increase of 1.1% from last month. As I expected, prices have trended up each month of 2018 and next month will likely mark the month where 2018 prices are higher year over year. The graph below shows 2018 prices have still been well below 2017, but 2018 is showing stable growth month over month. June should see prices surpass 2017 and continue to be higher than 2017 throughout the second half of the year.
In Brampton, average sale prices in May for Detached homes were $833,072, Semi's $635,814, Towns $615,388, Condo towns at $474, 012 and Condo Apartments at $366,738
In Orangeville, average sale prices in May for Detached homes were $594,824, Semis $431,500 and Towns $505,817.
Now, enter the variables…
The market appears to be growing at a healthy rate but we are in quite a turbulent time and far from out of the water. There are so many moving parts in place that I am afraid to give people opinions on any market predictability.
The first variable falls south of the border. Trump has been saying some wild things in an effort to get the better deal in trade talks. He has stated Canada is a threat to National security and has already imposed tariffs on steel and aluminum on Canada. Trudeau has struck back, and will be imposing tariffs on a list of items to the States. There is no NAFTA agreement in place and being in the midst of a potential trade war with our biggest trading partner is sure to affect the Canadian economy in some way.
The most direct factor influencing the estate market is mortgage rates. With the stress test in place for everyone and as mortgage rates increase, buyer affordability gets tighter. The less people can afford, the more buyers there are competing for the affordable homes. This can, in turn, drive prices up for the entry level homes (condos, towns and semis) and the more expensive homes could have a more difficult time finding qualified buyers. By the way, mortgage rates are expected to continue to rise with another potential increase in July.
Now, enter FORD NATION. A PC majority government is in power in Ontario and Doug Ford is in charge. It’s way too early to tell how this will affect the market as he has not officially mentioned any plans for housing. Early into the election, he mentioned scrapping the 15% Foreign Buyers Tax as he believes in supply and demand dictating the market. I agree with this in principle, but the damage was done last April with the Fair Housing Plan. We are still in recovery mode from then and the market finally appears to have stable growth. Reintroducing foreign money back into the equation can throw the market for another loop. Ford mentioned using part of the Greenbelt for development to increase supply to counter demand but quickly changed his tune on that one when he was met with immediate condemnation. He has since been quiet regarding the real estate market. Now that he is in power, who knows where we’re headed!
Thanks for reading! I'm very curious to know your opinions on where you think the market is headed now. Don't hesitate to reach out for anything you need to know! I'm always available to help you buy, sell or rent your next place so call, text or email me anytime!