A Restrained March: What’s Happening in the Toronto Housing Market

“Restrained” is a good word to describe the March market. We saw many buyers holding off on making purchases due in large part to the OFSI’s stress tests and higher borrowing costs. The number of transactions reported through TREB’s MLS System dropped by 39.5 per cent from March, 2017. Tellingly, sales were also down 17.6 per cent compared to the March average for the past 10 years. These findings were more or less in line with TREB’s recent Market Outlook report. President Tim Syrianos has reiterated the board’s expectation that these numbers will turn around in the second quarter.

New listing numbers take a dip

The number of new listings on the MLS System dipped by 12.4 per cent in comparison to last March. Contrast that decrease with what happened in January of this year, when there was a 17.4 per cent increase in new listings year over year. It goes without saying that we’d usually expect to see more new listings in March than in January. But this year has been unusual. Of course, the same can be said of last year—both in terms of housing prices and how quickly homes on the market were snapped up.

“[W]e are comparing two starkly different periods of time,” noted Jason Mercer, TREB’s Director of Market Analysis. “last year…we had less than a month of inventory versus this year with inventory levels ranging between two and three months.” It seems that many sellers are waiting for what they hope will be a more profitable time to list.

Houses hit hard

There’s no doubt about it: in most neighbourhoods, it’s still a buyer’s market for single-family homes. The market’s overall average selling price went down by 14.3 per cent as compared to March of last year. Detached houses, which declined by 17 per cent year over year, were largely responsible for this discrepancy. The decrease was most pronounced for high-end houses—market share for detached homes over $2 million was just half of what it was in March of 2017.

Condos were a different story. Average price growth was just over 6 per cent in the city’s still-hot condominium market. Anecdotally, we’re still seeing very strong interest and offers in both resale and pre-construction condos.

An upswing around the corner

The Fair Housing Plan, the OFSI’s stress test, and shifting borrowing costs have all had a major impact on the housing market this quarter. In March, we saw the ongoing effect that these factors have had. But on the whole, last month wasn’t terribly surprising. Drops in year over year numbers reflect last year’s soaring prices, which continue to skew the perspective many buyers and sellers have of the current market.

Condo sales remain strong. As for detached home sales: they won’t slump forever. TREB President Tim Syrianos expressed the change the board has been predicting, saying “[h]ome sales are expected to be up relative to 2017 in the second half of this year.”

 

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