Inventory Up, But Sales Down. Yet Prices Are Still Increasing.
Tuesday Jun 06th, 2017
Toronto's 2017 May/June market is very interesting: "Inventory" for sale is up (as is every spring); "sales" are down (more for buyers to choose from) yet prices have still increased year over year. There's no real reason for the slowdown in the number of properties sold. It's a 'healthy adjustment that isn't triggered by anything'. The interest rate hasn't changed/increased, and we're not in a recession. So the question is "Why?"
Home sales in Toronto dropped to 10,196 in May, down 20.3 per cent from last year with detached home sales leading the decline at 26.3 per cent.
However, supply for sale, saw a 42.9 per cent jump from 2016. Condo inventory though was lower year-over-year, and remains tight. .
“Home buyers definitely benefitted from a better supplied market in May, both in comparison to the same time last year and to the first four months of 2017,” said Toronto Real Estate Board president Larry Cerqua.
“However, even with the robust increase in active listings, inventory levels remain low. At the end of May, we had less than two months of inventory. This is why we continued to see very strong annual rates of price growth, albeit lower than the peak growth rates earlier this year,” he added.
CIBC chief economist Benjamin Tal indicates that market conditions were already changing before the introduction of Premier Wynn's Fair Housing Plan.
“I think that is exactly what the doctor prescribed – what we need is a slowdown that is not triggered by anything,” Mr. Tal told The Globe and Mail, adding that the adjustment is healthy. He added that there is not an interest rate spike or recession that could see a crash.
According to TREB’s HPI benchmark index prices were up 29% year-over-year The average selling price increased by 14 per cent across the whole area to $863,910.
Everyone is asking whether Wynn's Ontario Fair Housing Plan has had an impact on sales in Toronto. TREB’s director of market analysis Jason Mercer comments cautiously:
“The actual, or normalized, effect of the Ontario Fair Housing Plan remains to be seen. In the past, some housing policy changes have initially led to an overreaction on the part of homeowners and buyers, which later balanced out,” he says.
He adds that the jump in active listings appears to be homeowners taking advantage of higher prices, having delayed selling, perhaps because they still expected prices to rise.