From the Toronto Star, May 15, 2017
Toronto sees April home prices grow as listings soar
Toronto region sales were down but prices still growing, says the Canadian Real Estate Association. Some experts feel the market is becoming more balanced but it’s not a buyer’s market yet.
A record 36 per cent increase in re-sale home listings last month hasn’t stopped prices from gaining ground in the Toronto region but it does have realtors adjusting their selling tactics.
Toronto area home prices in April grew about 5 per cent compared to March and 32 per cent year over year, according to the Canadian Real Estate Association (CREA) benchmark index.
At the same time the number of Toronto area residential sales declined 3.8 per cent compared to April 2016, and were down 6.5 per cent compared to March 2017.
That compares to a 1.7-per-cent drop in sales nationally between March and April and a 10-per-cent increase in the number of homes sold in Canada in the same period.
Toronto and Greater Vancouver, the country’s most expensive real estate markets, continue to exert a significant influence on the Canadian picture, said CREA in its Monday release.
Taking those two cities out, would trim more than $150,000 from the average Canadian home price in April to $559, 317, 10.4-per-cent higher than a year earlier.
The benchmark price is based on a computer model of the value of various home characteristics in the same area, assigning a value to features such as lot size, square footage and the age of the property.
It is the “gold standard” for measuring home prices because, unlike average price, it measures more than dollar volumes which can be skewed by a large number of sales in one particular housing category or price range, said CREA senior economist Shawn Cathcart.
Toronto continues to be the tightest real estate market in the country but it’s still too soon to say that Premier Kathleen Wynne’s April 20 Fair Housing plan has cooled the market, he said.
“In April, the Ontario government announced this suite of measures aimed at cooling the market and sales went down and new listings went considerably higher. That is one month and it’s still a wait-and-see right now,” said Cathcart.
The respite in red-hot bidding wars is a relief for agents, who have been crying about the lack of inventory for months, said Toronto realtor Desmond Brown, who has been in the business for 19 years.
“This is a real blessing. A lot of us have been waiting a long time for a fairer market. With more listings on the market now, our buyers have a chance,” he said. But it also means that agents “have to stop playing games and start pricing the properties closer to what we feel the market value is,” he said.
While some agents would like to have the conditions of two months ago, Brown said, “We can’t be gambling we’re going to be getting $100,000, $200,000, $300,000 more than the asking price.”
Sellers who don’t get an offer on a pre-set date shouldn’t panic if they have listed their property at a fair market value.
“It will be just a matter of time before we get an offer on it and we can negotiate a sale,” said Brown, adding that “negotiate” is a term that hasn’t been used in a long time in the Toronto area.
It’s about managing client expectations in an environment where it takes longer to sell homes and there are fewer offers, said Dianne Usher, senior vice-president of Johnston and Daniel, a division of Royal Lepage.
“Instead of selling in three days, it’s taking five days. Instead of selling with 10 offers, it’s selling in five offers. Sometimes properties don’t sell on offer day and people go into panic mode thinking the sky is falling. But what’s also occurring is those same properties are selling a day or two later or a week later and they’re selling well over asking with one offer,” she said.
She says the market is becoming more balanced but it’s not a buyer’s market yet.
Usher puts the flood of April listings down to a quick-start spring season in which all the inventory may have emerged at once and it may even include some carry-over listings from the fall when sellers chose to wait before putting their houses on the market.
The near failure in April of alternative mortgage lender Home Capital has injected some skepticism in the market too, said Usher.
Some buyers, such as people who are self-employed, require those “B lenders” to qualify for a mortgage, she said. But recently a little more caution has crept into consumers’ decision-making.
“We’re seeing a few more situations of buyer’s remorse and people are not stepping up to the plate as they were at the beginning of April or end of March,” she said.
The real estate industry talks a lot about averages but there are huge variations in how the market responds to different locations and types of homes, said Lauren Haw, CEO of online brokerage Zoocasa.
A detached house in “fine condition” in Moore Park recently didn’t get any offers. But a semi-detached nearby that was completely done “studs up” sold for $850,000 over the asking price, she said.
Haw says buyers are still fighting over small homes.
“Listings are staying longer, we’re getting far fewer showings in the 905-region versus the 416,” she said.
“What we’re seeing now that we didn’t see a month ago is a lot more deals are going through conditionally. That’s not something that would be tracked in the numbers because a sale is a sale. For us to see conditional deals going through that is an indication there’s fewer offers per deal,” she said.
“We’re still seeing bidding wars if the location of the house is right and the quality is high,” said Haw, who says it’s increasingly important to do minor repairs, freshen the paint and properly stage properties before they hit the market.
At Queen’s Park, Finance Minister Charles Sousa said it’s “still early to tell” if the provincial government’s foreign buyers’ tax is contributing to the apparent slowdown in real estate sales.
“What we do see is . . . there’s more supply in the mix, which is positive,” Sousa told the Star on Monday.
“The national numbers have tapered down some. The GTA numbers are still strong though there’s a lot more listings than before,” the treasurer said.
“We’re going to keep monitoring and see how it plays out,” he said.
Sousa emphasized that his “concern has always been about unintended consequences” that might affect the value of homeowners’ houses.
Meantime, an RBC housing update on Monday said the government’s new measures “have had a noticeable rebalancing effect on that province’s market.”
With files from Robert Benzie