According to recent data gathered by John Pasalis, President of Realosophy Realty, a toronto-based brokerage, sales of Freehold home in the Greater Toronto Area have reduced by 26% after last month’s introduction of Ontario’s Fair Housing Plan.
Pasalis said, “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, 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.”
The sales of freehold homes were down in 10 of 12 researched markets, led 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 cooling of the market isn’t a cause for concern. He argues that it was needed – 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 argues that the reasons behind Toronto’s real estate cooling is a result of public perception as opposed to the actual policies, including a 15% 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 had a similar effect last year after the announcement of its own foreign sales tax. Since then, certain conditions show different signs of rebounding. This begs the question: Is this a cause for concern for Toronto investors?