February 2018

By March 4, 2018

We’re living in interesting times, and the GTA real estate market is certainly interesting!Have a look at these numbers comparing last year this time to Feb. 2018.

A quick look at these numbers might lead you to think the market is in turmoil. But, that’s not the case.

In February of 2017, the market was bordering on delirium. We had record low mortgage rates, limited inventory, and a collective belief that if one didn’t buy immediately, there wouldn’t be an affordable second chance. These conditions led to price increases of more than 30% on a year-over-year basis. Mid April the government implemented the 15% foreign buyers tax with the aim of curtailing this frenzy. Then, at the beginning of 2018, the government added a rigid new stress-test for borrowers seeking conventional mortgage loans and we saw three mortgage rate hikes. As we had forecasted, the market normalized. So bottom line… if it hadn’t been for those crazy over-inflated numbers we saw in 2017’s first quarter, this year’s numbers would be… perfectly normal.

{TORONTO BY THE NUMBERS}

{TORONTO BY THE NUMBERS}

Central Toronto Districts C01, C02, C03, C04, C08, C09, C10, C11, C12

The biggest drag on this year’s numbers is the decline in high-end property sales. In many ways, this is understandable. Last year’s frenzied market saw 389 properties sell for $2 million or more; this year’s total is only 126. This 67% decline is not surprising. After all, this price threshold is beyond the reach of most buyers, especially with the increase in mortgage rates and the new stress test.

To be clear, there are plenty of houses selling for more than $2 million. There are still many homes in the higher range trading daily, just not the same inflated number as 2017.

As for the condominium market, you’d think there is a “fire” sale, with the number of small 1 and 2 bedrooms selling over list in record time. Why? Because condos are the only affordable option for anyone trying to break into the market.

What will the March numbers look like?

The March numbers will likely be slow with March Break, Easter and Passover compressed in the second half of the month. Many owners with plans to sell, will wait until the holidays are behind us – and that will bring us to April.

So what can we expect to see between April and June?

There were many buyers and sellers that put their plans on hold in the second half of 2017. They did so in order to understand how government interventions would impact prices. Now that the market is solid again, they’re ready to come back – which points to a busy spring market. Prices should continue to rise, steadily and gradually.

Whether you’re buying or selling, preparation is the key to success. It’s never too early to start the planning stage.

If you’ve got questions, I’m here to answer them. Reach out to me today: 416.566.7730 or susanbandler@chestnutpark.com. I’m happy to help you determine the best strategy for a successful move in this market.

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