Toronto’s housing market is showing signs of stability after enduring a months-long slump in the wake of new mortgage rules and provincial policies design to cool off rising prices.
Home sales and average prices in the Greater Toronto Area rose in June, stats the local real estate board called “positive signs.”
Robert Hogue, a senior economist for the Royal Bank of Canada, said prices will likely stay relatively flat for the foreseeable future. The “bottom has been reached,” he said, noting that those hoping to see more affordable home prices in the city would likely be disappointed.
“At the end of the day, affordability is unlikely to really improve materially for most buyers going forward – at least over the next year or so.”
Home sales in the region rose to 8,082 in June, up 2.4 per cent from a year earlier and 17.6 per cent from May, the Toronto Real Estate Board said on Thursday. The uptick follows a period of monthly declines since the federal bank regulator, the Office of the Superintendent of Financial Institutions, imposed new mortgage rules in January. Those rules include new tests for home buyers that make it harder for some borrowers to qualify for a mortgage.
Mr. Hogue said he believes that the market overcorrected amid the “major” cooling impacts of new mortgage rules and now is balancing out. Though the numbers announced on Thursday appear substantial, he said, “in the scheme of things, it only retraces part of the decline since January.”
The average sale price in June rose by 2 per cent from a year earlier and 3.3 per cent from May. But the MLS home-price index, considered a better measure of the market, slipped 4.8 per cent over the year, and was relatively flat compared with May.
Jason Mercer, director of market analysis for the Toronto Real Estate Board, said the board has been calling 2018 “a year of two halves” – with the market in the the first half still absorbing out the effects of the mortgage stress test rules and Ontario’s Fair Housing Plan, which implemented a number of measures, include a tax on some foreign buyers of real estate.
Buyers and sellers sidelined by the changes have started to creep back into the market over the past few months – but, he said, there still isn’t much movement in terms of listings.
“In some neighbourhoods, as we move forward and we continue to see an uptick of sales, if we don’t see a lot of movement on the inventory front, we are going to see pressure on pricing,” he said.
For some, though, the cooling real estate environment has been enough to secure a home in a market that still features some bidding wars. Conrad Rygier, a broker with Keller Williams Neighbourhood Realty, started looking for a home for one of his clients in February.
“We were constantly out-bid,” he said. The winning offers weren’t much higher than theirs, but buyers were aggressive in the first half of the year, so they lost out on four or five homes in a row. Last month, as more owners made the choice to list their homes and inventory improved, his client finally bought a property.
“I find a lot of sellers, in lieu of last year’s craziness, were putting properties higher than value justified,” Mr. Rygier said. “I think a bit of seller realism has come through … it brings back buyer confidence that buyers will actually have a chance, and they’re not going to be paying through their nose for it.”
With files from Michael Babad