Sale Prices Down in Canadian Housing Market
Although homes are still expensive locally and nationally, all data points to a moderating real estate market with lower sales and, in some cases, declining month-over-month prices.
The Canadian Real Estate Association (CREA) recently announced that national home sales declined further in July, falling 2.1 per cent month-over-month. CREA says that actual (not seasonally adjusted) activity in July stood 11.9 per cent below last July's level and that the number of newly listed homes edged back by 1.8 per cent from June to July.
In terms of prices, The MLS Home Price Index (HPI) was up 12.9 per cent year-over-year in July 2017, while the national average sale price edged down by 0.3 per cent year-over-year in July (a slight but interesting decrease).
As far as the dip in sales goes, the July dip marks the fourth consecutive monthly decline. While that decline was about one-third the magnitude of those noticed in May and June, it leaves sales activity 15.3 per cent below the record set in March.
CREA says the downward trend is being driven by a number of large markets, most notably the one in the GTA.
"July's interest rate hike may have motivated some homebuyers with pre-approved mortgages to make an offer," said CREA President Andrew Peck. "Even so, sales activity continued to soften in the Greater Golden Horseshoe region."
It also appears inventory is starting to decline.
CREA says the number of newly listed homes slipped further by 1.8 per cent, led by the GTA. While low inventory was a persistent problem during the wild winter months, more homes made their way to the market in the spring and summer. Now, however, it appears some sellers are holding back—possibly because of the Ontario government's Fair Housing Plan and its proposed taxes on foreign buyers and speculators (rules that have put some potential buyers a little on edge)
"With sales down by about the same amount as new listings in July, the national sales-to-new listings ratio was little changed at a well-balanced 53.5 per cent," CREA writes. By contrast, the ratio was in the high-60 per cent range in the first quarter of 2017."
This, it seems, is good news.
According to CREA, a national sales-to-new listings ratio of between 40 and 60 percent is generally consistent with balanced national housing market, with readings below and above this range indicating buyers' and sellers' markets respectively.
"Based on a comparison of the sales-to-new listings ratio with its long-term average, more than 60% of all local markets are in balanced market territory," CREA writes. "In the Greater Golden Horseshoe region, housing markets that recently favoured sellers have become more balanced, with some beginning to tilt toward buyers' market territory."
Could it be? Could we really be swinging back towards a buyers' market after months of wild over-asking offers and bidding wars and open houses packed with hundreds of desperate prospective homeowners?
As far as prices go, data indicates that the frenzy is indeed over.
The aggregate composite MLS HPI rose by 12.9 per cent y-o-y in July 2017, representing a further decline in year-over-year gains since April.
CREA says price gains diminished in all benchmark categories, led by single family homes (meaning houses are getting a little less expensive. Apartment and condo units, on the other hand, are enjoying an uptick in prices. CREA says apartment suites posted the largest year-over-year gains in July (+20 per cent), followed by townhouse/row units (+15.9 per cent), two-storey single family homes (+10.7 per cent), and one-storey single family homes (+9.7 per cent).
Although prices are still high, benchmark price gains slowed again on a year-over-year basis in Greater Toronto, Oakville-Milton and Guelph, but remain well above year-ago levels (Greater Toronto: +18.1 per cent; Oakville-Milton: +12.7 per cent ; Guelph: +23 per cent).
The actual (not seasonally adjusted) national average price for homes sold in July 2017 was $478,696, down 0.3 per cent from where it stood one year earlier. CREA says this was the first year-over-year decline in the measure since February 2013, reflecting fewer sales in the GTA and Greater Vancouver.
So there you have it, prices are indeed dipping month-over-month. Although it's unlikely that GTA housing will ever be truly "affordable," it does appear that some balance is returning to the market.