There has been a great deal of talk surrounding the overheated Toronto housing market lately; and experts have predicted a 10 – 15 per cent decline in the next few years. Looking at July’s stats for this city’s market, it might seem as though that’s already happening.
According to the Toronto Real Estate Board, the sale of homes in the Toronto region dropped 1.5 per cent in the month of July. Condos, which saw a huge decrease of 18 per cent in May, slipped 10 per cent in July as well. However, one sector that has been slumping along with the rest of Toronto in the past few months picked up some steam. Those were townhouses in the city, which saw an increase in their sales of 15 per cent in July.
In total however, there were only 7,570 homes sold in Toronto over the course of July. That’s down from 7,683 – the number that was sold last July.
But those rising home prices? It seems as though they are also on the rise. The MLS home price composite index was up 7.1 per cent from a year ago; and prices in the Toronto area were on average $476,947, also up from a year ago – by 4 per cent. But while sales were down, the amount of new listings hitting the market was also up. In July listings in Toronto hit a grand total of 13,888, which is up from the 12,407 that the city saw last July.
Could this be the first signs of the bubble bursting?
This is what some think, as a lack of home sales and an increase in listings is one of the most typical signs of a crashing housing market. But, Ann Hannah at TREB says that’s not the case here.
“Very strong annual sales growth in the first half of 2012 and an earlier peak in sales this spring compared to 2011 help explain more moderate sales this summer,” she said when the new numbers were released.
Ms. Hannah is also attributing the slowdown in sales to the Toronto land transfer tax, which she says has made some wait to buy. But, with that land transfer tax having been in place for three years now, could that really be the reason?
But if Toronto is slowing, it’s only a sign of what’s going on in the rest of the country. Vancouver, who was experiencing Canada’s biggest Hay Day of housing in decades just one year ago, has now started to significantly slip. Now, that city is seeing the lowest numbers in sales and listings that they’ve seen since 2000 for both June and July. In July, Vancouver only saw 2,098 properties sold – down 18.4 per cent from last July.
What do you think? Is this the beginning of the end for the housing market in some of Canada’s hottest cities, such as Toronto? Or do you think the tighter mortgage rules are now making it more difficult and therefore, the marketplace is responding? Is the market just correcting itself, as so many had predicted? Or is it sinking – like others had forecasted it would?