Homes and Condo Mississauga

Toronto housing market takes a February nosedive

The property market in Toronto appears to be losing energy in February following a microburst of purchases when the new year began.

John Pasalis, president of Realosophy Realty Inc., says the momentum he saw until about the third week of January has disappeared. Turnover has fallen in recent weeks compared to last year and the decreases are steeper.

"They are popular and that is interesting," says Mr. Pasalis, adding that his analysis reveals increasingly sharper sales declines week.

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Mr. Pasalis is not sure of the reason for the shift in pace, but he suspects that some potential buyers feel out of the market after interest rates have started to rise and a new "stress test" on uninsured mortgages has come into effect on 1 January. Others, he suspects, try to time the market because they expect a wave of negative figures from the Toronto Real Estate Board in the coming months.

"Some are almost hoping – for some panic – to take advantage."

Market watchers expect sales in the first quarter of 2018 to show a marked slowdown compared to the non-upgraded run in the first months of 2017. But Mr. Pasalis says sales to February have been below historic standards

Sales in the Greater Toronto area declined by 33 percent in the first two weeks of February compared to the same period last year. year. Once again, detached houses led the decline, Mr Pasalis said, with a 40 percent drop. Sales of condo units declined by 27 percent in the first half of February compared to the same period in February 2017.

Speaking more figures, says Mr. Pasalis, sales fell by 28 percent in the 416 area code of Toronto and 36 percent in the vicinity of 905.

The average price in the GTA dipped 12 percent in the first two weeks of February compared to the same period last year.

New offers rose six percent in the GTA in the first half of February compared to the same period in 2017.

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Mr. Pasalis says the mood is completely different from last year, when the prices were so dizzyingly high that "fear of missing" seized the market. Buyers were willing to accept big compromises because they were petrified that waiting would mean they had to go on for a few more weeks.

This year, buyers have a different mindset because sales are slower and values ​​are uplifted, they no longer climb at a dizzying pace.

"If you spend 100 percent of your budget and do not like the house, there's reason to be more patient."

David Madani, senior economist at Capital Economics, sees cautious signs that the tightening of mortgage rules and rate hikes are starting to slow down the growth of household spending more recently.

He points out that some households are already starting to struggle with rising borrowing costs, adding that Canadian consumers with heavy debts are naturally accustomed to extraordinarily low interest rates.

Mr. Madani refers to retail sales showing that family expenses have become considerably milder at the end of last year. And although there is still no upswing in consumer failures, it seems that debt restructuring has increased significantly, Madani says.

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Jimmy Molloy, a real estate agent with Chestnut Park Real Estate Ltd., believes that some entry level buyers feel reticent because of the mortgage "stress test" that banks and some other lenders started on 1 January 2012.

"When you make that first dive in the pool," you are nervous.

The market works from the bottom up, he says, so when buyers in the low-to-mid segment are hesitant, buyers are also slowing down.

Higher interest rates, the stress test and the large price gap between other housing types and detached houses make the leap difficult for many potential buyers. The detached house market in the 905 area has a lot of stock, he says, and some parts of the 416 also have a good supply.

"Free-standing houses do not fly off the shelves," he says. "It's not like we're being put under water, but the recording speed is a bit slower."

People in the middle of the market often look at the high cost of jumping from a three-bedroom house to a larger house and decide to stay and renovate, he says.

Meanwhile, he has several buyers who are looking in the range of $ 4 million and they are struggling to find something to buy.

In the carriage neighborhoods of Rosedale, Forest Hill and the Annex, there are few features that you can see. He has been in talks with many homeowners who are planning to shrink from large homes in those areas, but they can not find a condo unit that offers the right mix of size, character and location.

"I have a bunch of people who would like to buy great condos and there is not much product available."

Robin Pope of Pope Real Estate Ltd. says the market in Toronto condo is on fire. He has sold several units in recent weeks, with eight to ten bidders who usually compete for each property.

Mr. However, Pope warns that the marketing strategy is important. In some cases, sellers have not done as well as possible because of the bad tactics.

He points to a condo unit that is on sale this month at voguish King Street West with an asking price of $ 449,900 and an offer date one week later. Two days before the planned offer date, a condo of comparable size at the same asking price was listed in a neighboring building. The second unit had a parking space, which usually adds $ 40,000, says Pope. That feature also had an offer date that was placed for a week after offer.

a bully quickly stepped forward and offered a bid of $ 508,000 on the list for the second unit and accepted the seller, says Mr. Pope. Two days later the unit sold without parking on its offer date for $ 504,000.

Mr. Pope indicates the seller who was on the list and then snatched the plague bid that acted too quickly. By waiting to see the result of the other match, he or she might have been able to say more.

"Although the asking price for both was the same, the unit with parking was clearly worth more," he says. "In hindsight, it seems that they had to wait two days to see how it happened before they offered or considered an offer."

The market for houses in the center of Toronto – especially for real estate up to $ 1 million or so – is still quite competitive, "says Mr. Pasalis.

Very desirable houses along the metro line still attract several offers to, he says, but the bidding madness of last year has decreased.

In the 905 areas the core is ringing, buyers and sellers are at a distance.

An agent in his office had a listing in York Region with a asking price of $ 1.7 million.The building languished for months, but the sellers insisted on the same price that neighboring houses sold in the spring of last year.

After a series of gradual reductions, the asking price was reduced to $ 1.4 million, which was still too high for the buyers, says Mr. Pasalis, and the sellers finally settled with $ 1.33 million.

"It's a big drop f where they were originally and a slow process. "

Mr. Pasalis says many vendors are sticking to their price and buyers are just as stubborn in waiting to adjust their expectations, which is why the stock is so high in the 905 area, says he

"It's frustrating for buyers because you do not want to pay too much," he says, but they can not move on if sellers do not give in.

As far as potential sellers are concerned, some homeowners consider listing, but they're afraid the market is mild, Mr. Pasalis knows a number of people who think they can raise a higher price in May or even in the fall.

Mr. Pasalis says he advises homeowners – especially those who have to sell them – to to mention while the competition is fairly light It is impossible to predict where the market will be later this year, he warns, "It is not always great to time the market."

Mr. Pasalis points out fate of selling ers in the spring of 2017 when the market of a parabolic turnout almost went to a dead stop in a few weeks after the Ontario government introduced new policies aimed at taming the wild course.

Homeowners who are hoping for a return to the rich values ​​that were traded in the past year, these figures may not have been displayed for a long time, he says. But people see declines of those levels as a loss, even if the profits were only on paper. "This loss aversion that people have is a bit off, that is the psychology of the seller at the moment."

Mr. Molloy hopes that the spring market will pick up again with more offers. At the moment homeowners are reluctant to mention an existing building because they know it will be difficult to find the following.

"People always wonder: is this the right time?" He says. "Sometimes you have to deal with people for years and they are not psychologically ready, they sell the house of the family, it tries someone from their house to mention it."

Mr. Molloy has tried to bring buyers and sellers together when he knows that a buyer really wants to be on a certain street and a homeowner may be tempted to sell privately. But such deals can be difficult to arrange because sellers often have high expectations. "Everyone knows that there is a premium when there is a lack of supply or something is not on the market."

Mr. Molloy says that sales statistics with large quantities from this year last year may worry some consumers, but he calls for a deviation early 2017. "Last year the first four months were so overheated that it would never be repeated," he says.

He does not expect the same frenzy this year, even when more houses are coming onto the market. "The market is reasonably stable and should not increase by 20 percent on an annual basis." That is not stable. "

While the Toronto area remains in a holding pattern, few ask for more government intervention

Looking at British Columbia, where the provincial government recently introduced broader taxes and more policies aimed at curbing investors, Mr. Pasalis says Ontario might consider similar measures in the future.

"Their policy is really focused speculation. "

Mr. Pasalis points out that the Vancouver market has homes in the range of $ 3 million to $ 4 million that are vacant while speculators are waiting for their appreciation, and the new policy will make that practice less profitable. 19659002] "It's just a lot more expensive to sit on those properties."

He believes that speculation is more prominent today in Vancouver than in Toronto, but that could change. "When the BC introduced the government first a foreign Investors, for example, were increasingly looking at Toronto. "It has pushed so much money here."

He warns that the pattern may be repeated if foreign buyers consider Toronto as a more affordable alternative. "There is so much money and greed and people want to make money in every possible way. "

Meanwhile, he believes that foreign investors are circumventing foreign buyer tax in the Toronto region by to send children to school in Canada and to buy a place for them to live in. "A lot of money is flowing through students."

Mr. Pasalis does not think foreign buyers leave many homes in Toronto and other cities in Ontario, but adds that it is difficult to detect how often the gambit is.

He points out that cities such as Markham and Richmond Hill have attracted many Asian buyers and there is the possibility that some of the houses in those cities are empty for a long time.

One clue Mr. Pasalis looks at how prices in an area relate to local incomes. 19659002] In Markham, for example, the median income is $ 90,000 and the median price to buy a house is $ 1 million.

In Pickering, the median income is $ 100,000, while the median price for a house is $ 680,000.

"For whom do you want your housing market?" is a question that politicians need to address, he says.

Statistics Canada has released data showing that foreign ownership in Toronto and Vancouver is less than five percent

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