The Canadian Real Estate Association announced last week that home sales across the country dropped by 4.5% from the month before. The news is not that surprising, as the winter months are often slow in the market with homebuyers spending time and money on holiday shopping, and then trying to catch up on that spending. Add to that snow on the ground and a chill in the air that keeps people at home rather than out house-hunting, and no one should panic that January saw a slight drop. But it was the biggest drop the housing market had seen since July 2010, and the first time it saw a decline of any kind since August 2011.
The CREA report also stated that the national average home price increased by 1.2% year-over-year; not a large increase and perhaps a sign that the downturn of home values that many predicted is on its way. But, buyers and sellers in different markets need to take into consideration their local market and what’s happening there. Toronto for example, is way above the national average, seeing a 15% year-over-year increase in home prices. The news might be somewhat disappointing for those looking for a Toronto mortgage, and the fact that new listings are also slow coming doesn’t help, homebuyers should keep in mind that we are still in the winter market, when things are bound to be slower; and we’re not that far away from spring, one of the busiest times for buyers, sellers, realtors, and mortgage brokers. But there’s more good news too.
While the total number of listings in Toronto was down, the total number of housing starts was up, with builders and developers trying to meet the need for the rising demand. And those starts didn’t just go up, they went way up, being second only to the boom that was seen in the Toronto market at the height of housing starts in 2008. Most of those starts, just as they’ve been for the past two years, were in the condo market.
The Ottawa housing market was much the same as Toronto’s, although homes in the nation’s capital only saw an increase of 6% year-over-year in January. Other good news for Ottawa homebuyers is that unlike Toronto, home sales were relatively average; similarly to Toronto however, the amount of new listings also remained low.
While the news might appear to be somewhat dismal, it is important that homebuyers remember that there is bound to be more available in the next coming months; and that as usual, when late March/early April hits, they’ll have their pick of the crop once again. And just as important, they also need to remember that while home values may still be on a steady increase in several major markets, those same markets are going to have to see a drop sooner or later. That means that now more than ever, homebuyers need to be extremely vigilant about the price of a home they’re taking on, and how that value is going to change in the next coming years and months.
