It was a rough month for Toronto home sales, which saw a 22% downfall to 4,019 units sold in comparison to year prior, which was sitting at a record setting 5,155 sales. The Toronto Real Estate Board (TREB) released data earlier this week, stating this was the weakest month of sales for January since 2009.
The average price of homes sold in Toronto was also down, falling 4.1% to $736,783 compared to a year prior. The reason for the decline, according to TREB, is the result of the new mortgage guidelines and increased interest rates.
The housing market began to slow last April when the Government of Ontario introduced a set of measures, such as foreign buyers tax and changes to rent control, with the goal of cooling the market. More recently, on January 1, 2018 OSFI, a federal banking regulator, implemented a stress test for uninsured mortgages that will make it more difficult for prospective buyers to qualify for loans.
According to Jason Mercer, this type of inactivity is not a shock for this time of year. “It is not surprising that home prices in some market segments were flat to down in January compared to last year. At this time last year, we were in the midst of a housing price spike driven by exceptionally low inventory in the marketplace. It is likely that market conditions will support a return to positive price growth for many home types in the second half of 2018. The condominium apartment segment will be the driver of this price growth,” states Mercer. In January, the number of condos sold were down 21.9% from the year prior, however, average price was up 14.6% to $507,492. The biggest decline was noticed with fully detached houses in the 905 area code, where the average price dropped by 12% to $879,048, while in the 416 area code, average prices fell 3.9% to $1,283,981.
As the year progresses, TREB remains optimistic that the market will stabilize and the pace of home sales will pick up. The board estimates between 85,000 and 96,000 of residential sales in the GTA, and average sale prices to be within the range of $800,000 – $850,000. According to their 2018 Annual Forecast report released last week, they expect to see a slow start to the year as the housing market adjusts to the new regulations.