Should local investors be concerned about this?

Freehold home sales in the Greater Toronto Area experienced a drop in 26 per cent compared to the same time period in the previous year during the 30 days after the introduction of Ontario’s Fair Housing Plan last month, according to information gathered by by John Pasalis, president of Realosophy Realty, a Toronto-based brokerage.

“Of course it’s cause for a bit of concern. It’s a significant decline, especially given the fact that it’s not proportional across the GTA. Certain areas are getting hit harder than others,” Pasalis told CREW sister publication, MortgageBrokerNews.ca. “And that coupled with the big surge in listings … it’s cause for some concern because especially in the short-term, the concern is sellers who have bought their homes and now have their properties in the market … are having a very hard time selling.”

Freehold home sales experienced a drop in 10 of 12 researched markets, conducted by Richmond Hill (-62.1%) and followed by Stouffville (-49.3%), Markham (-46.2%), Newmarket (-44%), Vaughan (-34.3%), Aurora (-31.2%), Mississauga (-27.4%), and Toronto (-23.3%).

According to Pasalis, the fact that the market are cooling down is not a reason to worry, he claims it was necessary – it’s the rate at which it appears to be cooling.

“You can imagine it’s stressful for sellers who need to sell their house. The worst case scenario is what if they can’t sell it, or what if they can’t sell it at a price they need to in order to buy their next one?” he said. “You have to imagine these people, they bought a house assuming they’d sell their current home at a certain price and that price was based on April or March 2017 numbers. And if they’re getting 10% less now because there’s so much inventory and there are more buyers, even if they sell it they may not be able to afford their next one.”

Pasalis claims that the reasons behind Toronto’s real estate cooling are mainly because of public views as opposed to the actual policies, that including a 15 per cent foreign buyer tax.

“It certainly may have triggered people to think about the market and get anxious about it, but I don’t think the policies in and of themselves cooled demand,” he said.

Vancouver experienced a similar shock last year after the province announced its own foreign tax.