The real estate market is stalled and buyers and sellers are waiting to see what will happen when it comes back in September.
“They’re not sure whether the market slowed down for the summer for normal, seasonal market reasons or whether we’re on a downward slope,” tells Mr. Kholodov, an agent.
For now, it seems, many real estate agents and their clients are trying to grapple with the situation.
Mr. Guatieri, senior economist, Bank of Montreal, expects housing prices, which peaked in April, 2017 in the Greater Toronto Area, will continue to fall in the coming months before stabilizing.
Mr. Guatieri points out that the positive surprises from Canada’s economy just keep on coming. For 2017, three per cent growth (3%) growth in gross domestic product will be the strongest in six years (6 yrs) and twice (2) last year’s rate, tells the economist. The jobless rate is at nine-year (9-yr) lows, and consumer confidence at seven-year (7-yr) highs.
Outside of a rapidly cooling housing marketplace in the Greater Golden Horseshoe, nearly every economic indicator is pointing higher, he says.
He expects the Bank of Canada to follow up July’s interest rate hike with an increase in October and two (2) more in 2018.
The Ontario government’s Fair Housing Plan, which includes a 15 per cent taxation on real estate purchases by non-resident speculators in the Greater Golden Horseshoe area,” was a welcome reality check for purchasers, notably for domestic speculators who were flipping homes like pancakes,” tells Mr. Guatieri in a note to clients.
Sales of existing houses in the Greater Toronto Area plunged 40 per cent in July, 2017 compared with the same month last year, with detached homes leading the decline.
“Sensing a top, sellers have flooded the previously parched landscape with listings, shifting the market balance toward purchasers,” Mr. Guatieri says.
In the Toronto area, the price of a benchmark detached home has fallen eight per cent (8%) from April’s peak. That decline has taken place more quickly than the drop-off recorded in the Vancouver-area market after the B.C. government introduced a tax on purchases by foreign buyers, the economist notes.
“Will they recover just as fast?” Mr. Guatieri wonders, pointing out that Vancouver-area prices have retraced their steps.
Mr. Guatieri’s premise that prices in the GTA will stabilize is based on the assumption that the central bank’s rate increases will be minimal. He also reckons the Office of the Superintendent of Financial Institutions, a federal government agency, will scale back a proposal to impose higher qualifying rates on uninsured mortgages.
Mr. Kholodov, an agent, has been receiving many calls from owners who plan to list their houses or condo units for sale, but most want to wait until September or October.” I think there’s no damage in waiting as long as they’re not in a hurry .”
Mr. Kholodov adds that some buyers may be hoping for a deal but they don’t have a lot of bargaining power in central Toronto because the inventory is so slim.” Right now, it’s not working because there’s nothing for sale.”
When a desirable house does arrive on the market in a coveted neighborhood, he tells, it sells almost immediately. But Mr. Kholodov advises his clients that each neighbourhood follows its own trend.
If you’re selling a home in the midtown area of Summerhill, for example, the broader price trends for the country, or even the city, are likely not relevant to you.
“How precise do you have to be? I think you have to be very precise.”
As for the condo marketplace, buyers are still looking for high-end units in hot locations, he says. In the segment above $1.5 -million, sales have been sluggish but prices have held up.” People are holding onto their prices. Buyers are not paying. When the buyer doesn’t pay, the vendors don’t sell .”
In some examples, owners who were either living in a condo unit or leaving it vacant have switched gears and now decided to offer it for lease, he tells.” The rental marketplace is very, very healthy. The vendors do not have to sell.”
A condo, he adds,” offers a higher level of prestige and provides them with a better lifestyle. And they want to be with their friends .”
Investors are still circulating in the market, Mr. Kholodov tells. In his view, the 15 per cent tax on purchases by non-resident buyers has not had a big impact.
He expects a rush of new listings in the fall but it’s hard to tell if it will be greater than the traditional seasonal rise.
The rush to cash in has passed, Mr. Kholodov believes, so the expected swell of listings in the fall may not be as dramatic as the upsurge in May and June.
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Source: Globe And Mail
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