Cooling Toronto housing market can be a return to normal, tell realtors

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It could be the barely disguised frustration of sellers, who listed their homes this spring expecting to attract cut-throat bids from desperate, over-extended purchasers.

Instead they are seeing fewer showings and fewer offers.Toronto area home costs dipped about 7 per cent in May, 2017 compared to April, 2017 but remained about 15 per cent higher time over time averaging $863,910.

Even as the market has soared, there were some month-to-month price drops-off, mentioned Jason Mercer, director of market analysis for the Toronto Real Estate Board( TREB ), which published its month-end May, 2017 statistics on Monday.

December’s median home price was $46,212 lower than November’s $ 776,684 but it is “somewhat unusual” in the peak spring-time season, he said.

The last year-over-year price drop-off was 2012, told Mercer. May’s cool down arrived with a 43 per cent increased number of active listings.



But there’s no indication that a bubble has burst, he mentioned. That would require some dramatic altered in the economic environment — a real rise in lending rates or a change in regional employment.

“When you’re looking at still less than two (2) months of inventory and median price growth at close to of 15 per cent, that tells me there’s still enough strength out there between buyers to be driving pretty substantial price growing,” he said.

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Mercer says the boost in supply is down to stronger prices in the first quarter and the provincial housing policy announced in April, 2017 that have motivated some owners to cash out their equity. That has given buyers “the luxury of being able to take a step back” to see how the foreign purchasers taxation and other government policies shake out, he said.

“We’ve entered a period of readjustment in price anticipations in the market and this causes buyers and sellers to lock horns,” mentioned a housing commentary from RBC Economics Research on Monday that goes on to predict a buyer’s market in the coming months.

“We continue to expect that the next phase in the market will be a soft rather than hard’ ground,'” told RBC.

Buyers have more option, more day and even a little more negotiating position. But they should not expect a steal, cautioned one realtor.



“A lot of buyers misunderstand some of the data. They’re presuming there’s some sort of crash, some sort of huge buying possibility. There is an opportunity to buy with much less competitors but there surely isn’t an opportunity to buy at a major discount,” said Mamourian, broker.

He has discovered evidence of the nearly 20 per cent of drop in the number of sales year over time identified by TREB. The change presents a psychological impediment for a lot of sellers.

The main piece of advice we’re giving sellers is ‘Make sure we sell first before you buy.’

That was the opposite advice “we were” giving in the first quarter,” he mentioned. “You’d make sure you buy first just to make sure you don’t get stuck homeless — now 100 per cent you’re selling first .

“He’s also advising vendors a “worst-case scenario” sale price to make sure they don’t over-leverage themselves on their next purchase.


Some sellers who bought a couple of weeks ago is in a possibility of panicking, but most are the ones who decided to sell if they get a sufficiently high price.

“It doesn’t matter if they sell or not,” told agent Mr. Brown. He is among the agents who have lost listings because they weren’t recommending prices that met sellers’ expectations, many of which are based on first-quarter sales that learnt prices spike at 33 per cent of the prices over a year in March, 2016. Those kind of growth aren’t sustainable, he mentioned.

The new normal is really simply the old normal. “I actually welcome the markets we’re having right now,” he mentioned. “There was a period when people decided we need a bigger mansion so we’re going to sell this spring and move up to a bigger home. For the last few years a lot of people weren’t capable of doing so and now they can.”

Source: Toronto Star


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