Mr. Doug Porter, manager economist at BMO Financial Group, who was among the first to use the word “bubble” to describe Toronto’s soaring house rates in March, 2017, says the numbers are actually good for buyers who expect to live in their homes for years.
“There are indications in these amounts — even when they look weak on the surface — that things are starting to stabilize,” he said.
“Solid economic underpinnings,” which stimulated the Bank of Canada to hike interest rates a one-quarter percentage, will eventually shine through in the housing sell, said Porter.
The increase in the overnight lending rate to 1 per cent, the second largest rise the summer months, will affect some of the very short-term mortgage rates but won’t make a big difference to the house marketplace immediately, he said.
Rates will slowly but surely clamber up, said the economist.
“After rendering a massive tailwind for the house market sell for the last eight years, the tide has become and rates are starting to nudge higher and that’s going to act as a bit of a headwind to the housing marketplace ,” he said.
Meantime, the market is finding its equilibrium, said Porter, following the” sudden shock” in April of the Ontario government’s Fair Housing Plan, which included a foreign purchasers taxation among a series of marketplace chilling measures.
A 6.7 per cent year-over-year drop in new listings — the lowest for August since 2010 — could, however, lead to accelerated price growth, said Jason Mercer, TREB director of market analysis.
“As we start to see an uptick in sales, or at least a slower rate of diminish, and new listings remain down on a year-over-year basis, we could actually start to see a tightening in the marketplace ,” he said.
“The dip in demand has kind of disguised the facts of the case that we still do have a supply difficulty in the Greater Toronto Area ,” said Mercer.
While the price of detached residences in the region remained virtually unchanged this August, 2017 compared to last, the average condo cost increased about 20 per cent.
TREB consumer polling shows a shift in the type of residences people said they’re intended to buy, toward denser dwelling shapes such as town house and condos, and away from pricier detached homes, he said.
The real estate market has the benefit of a strong economic foundation with strong GDP growth, low interest rates and unemployment.
But the Toronto region remains a series of smaller marketplaces that are coming back into equilibrium at differing rates, said Mr. Forbes, realtor.
In King, where the average price of a home is about $1.5 million, he said,” it’s truly a buyer’s marketplace.”
“There’s one house selling for every eight (8) listings in that area. But in the City of Toronto, you’ve got a one (1) for two (2) — so for every sale there’s just two listings on the market. “That’s a seller’s market ,” he said.
Durham, Peel and Halton regions are still seller’s markets, said Forbes.
Seeing rates close to what they were a year ago is restoring customer confidence. At the same period, he said, “Properties, if they’re priced properly are selling in two to three weeks — that 20- to 25 -day date.
Meantime, there seems to be a return to a traditional seasonal marketplace, said Mr. Zigelstein, realtor.
“Traditionally, summer is a slower day and I think we saw that this year. It’s very normal to go back to that seasonal selling that we haven’t seen in a few years because the market has been so hot for so long,” he said. “This just takes you back to an almost normal marketplace precondition.”
Home prices diminished less than 2 per cent in August, 2017 from July, 2017, said Zigelstein.” In a summertime season where they’ve developed rates that’s a very good number to be at,” he said.” It means everything is not plunging as much as everybody thinks it is.”
Premier Kathleen Wynne said her Liberal government will continue to monitor the effects of the housing plan.
“We’ll be working with the real estate committee both in Toronto and beyond to make sure that we’ve got it right. But, you know, there was a real human cry about the over-heated marketplace and we’ve taken, you are familiar with, a 16 -point plan and we’ll be monitoring the impact,” she said
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