GTA real estate market has a spring in its step
Numbers point to return of seasonal sales year after market stalled almost overnight
Sizzling might be overstating the warming property market. But the real estate industry is finally predicting a return to a traditionally brisk spring — the kind of season that was virtually lost last year when, after months of bully bids and frenzied buying, sales soared in March and then stopped almost overnight.
Oakville broker Tracy Nursall of Sage Real Estate says it’s been longer than a single aberrant year since the Toronto region experienced a typical spring market. This year is more similar to 2013 or 2014 than any season since, she said. There was a long run-up to last March’s peak of a 34-per-cent year-over-year price increase. The exceptional activity dates back to 2015, she said.
“Everybody’s taking 2017 out of the numbers. they should take 2016 out of the picture as well,” Nursall said.
The right properties in desirable neighbourhoods are attracting multiple offers, while still allowing room for negotiation, downtown agents say.
Even in Durham Region — traditionally an island of affordability in the Toronto area — prices are rising and properties are moving faster than they were at the beginning of the year, said Dennis Roberts, president of the Durham Region Association of Realtors.
“There’s a lot of demand for homes even if people’s capacity (to buy) has been diminished,” said Phil Soper, CEO of Royal LePage.
He doesn’t discount the cumulative effects of the mortgage stress tests enforced by Canada’s bank regulator in January and the market deflation that followed Ontario’s foreign buyers’ tax last April.
Would-be buyers are still optimistic they will be able to afford a home even if they have to wait awhile, he said.
“This spring, people want to talk and they want to understand. Some of them can’t afford what they feel they need or they can’t pass the test to get financing but they still want to talk,” he said. That’s a different scenario than Vancouver in 2016, when people wouldn’t even speak to agents.
Even if the volume of transactions remains relatively low in the Toronto area, demand is building, said Soper.
Young people who haven’t been able to move out of their parents’ house are reaching the stage where they are going to buy houses and Canadians from outside Ontario are still flocking to the Toronto area’s job opportunities, he said.
“There were 25,000 new Ontarians, and most of them in the GTA last year based on people moving from other parts of the country. That is sharply up from what it was two years ago,” Soper said.
But macroeconomic factors will weigh heavily on the Canadian housing industry, he warns.
“What looks to be a very bright future could dim rapidly if a few things go wrong in trade, in megaprojects, even a sharp turn to protectionism or anti-immigration sentiment in Canada at the provincial level,” Soper said.
Realosophy president John Pasalis, says he’s not expecting “crazy gains” this spring. But if prices stay where they are, by July or August, the market could hold steady or possibly rise a little year over year by the end of 2018, he said.
“The market’s going to do a little bit better than most people are expecting,” Pasalis said.
There is still about two months’ of housing inventory in the region, he said. That level of inventory would be rising to four or five months if sales and prices were going to slow further. That’s what happened last spring.
“While it’s slow in Richmond Hill, that means it’s really competitive in other parts. As a whole it’s pretty balanced right now,” Pasalis said.
Even the 905 communities that were hardest hit when the market deflated last April and May are starting to improve, he said.
“Downtown is still insane. There’s no slowdown,” Pasalis said, and that extends to central neighbourhoods such as Leslieville, Wallace Emerson and Dufferin Grove, where buyers are competing for property.
Pasalis’s comments come a week after the Toronto Real Estate Board (TREB) reported a 14 per cent year-over-year drop in the average home price in March and a 40-per-cent plunge in home sales. But month-to-month figures showed some warming with last month’s prices 2 per cent higher than February’s and the third month-to-month rise.
“First-time home buyers — with the new rules — are really challenged to get into the market,” said Chris Alexander, regional director at Re/MAX Integra. He is predicting that year-end average home prices will end up around where they began this year.
“(Buyers) will show up for the good properties,” he said. “Sellers are going to have to come down to reality and understand this isn’t 2016 or the first part of 2017,” Alexander said.
“There are certain neighbourhoods in Toronto that have performed very well despite government intervention and the cooling markets around them,” he said, mentioning Etobicoke, Rosedale and Yorkville. But Markham and Richmond Hill will still see softening, he predicted.