Internal mid-month statistics for June from the Toronto estate board show average prices in greater Toronto area shed almost 6.4% in just two weeks with sales down about 50% from a year ago.
TREB announced on Monday in a note sent to members, that the average home sold for 808,847 from June 1 to June 14. This in turn is a sharp drop compared to that of the previous month. This comes above a 6.2% drop in cost from April to May. The board doesn’t make public mid-month stats anymore.
The peak of the market in Toronto was in April when the average price was $920,791, the same month that Ontario brought its 16-point fair housing plan.
Average prices have now reduced just over 12% from the peak but Craig alexander, chief economist of the conference board of Canada, said it might not be the numbers themselves that have cooled the market as much as the perception of their impact.
“I don’t think that many buyers have been pushed out of the market,” said the economist. “One of the biggest effects of tighter government regulations is that it creates a psychological response by potential sellers and potential buyers. It ends up like a wait and see approach. If everybody waits and sees what happens, you get a significant pullback.”
Economists and realtors have a similar reaction in the greater Vancouver market last year when the provincial government there brought in 15% tax on foreign buyers. Sales were in decline but later picked up at rapid speed, although prices did not drop as interestingly as it did now.
Vancouver tax was effective in august 2016 and according to recent reports the market has begun to gain balance.
The GTA according to Alex might follow a similar path in terms of recovery. “You can’t say (the decline in sales) is warranted by applying a tax on non-residents,” he said. “The government hit the pause button on real estate. Changes to regulations, generally speaking, have an impact for about six months and after that the market seems to figure out like normal and gets back to traditional prior behavior.”
At this point on, the GTA is cooling. Average prizes over the first two weeks of June on a year to year basis have risen.
“Maybe one of the factors is condo prices, which are a lot lighter than the detached homes,” said Zigelstein. “I don’t like using the word (correction). I think we are in a market with a ton of inventory and a ton of choice. We are definitely not in a seller’s market now. Its balanced market, maybe not a buyer’s market but it could become a full-out buyer’s market if inventory increases.”