Understanding TREB’s June 2017 Housing Numbers, the Interest Rate Increase and a Potential “Cool Down”
Today July 7th, 2017, Ottawa has approved a Bank of Canada interest rate increase by 0.25% to 0.75%. Which will likely result in a mortgage rate increase for new buyers in the city of Toronto and the Greater Toronto Area. This is the first increase in 7 years for Canadians.
This is cause for concern for a lot of sellers and buyers in Toronto and the Greater Toronto Area. It seems, however, that there are specific things that buyers are worried about besides an imminent lending rate increase.
- The number of sales has slowed down since the spring
- There are more active listings on the market than the last three months
- An increase in the months of inventory (MOI) available for homes
- The average price seemed to have decreased on sold homes
While at a glance, this might seem scary: spring of 2017 has had the lowest inventory and the highest number of home purchases in the history of Toronto. We can attribute the lower number of sales to sellers not willing to part with properties below Spring’s listing price, and buyers praying for a price decrease.
In turn, this has caused point #2, with the mental state of buyers and sellers in this housing market. They are just exiting the two hottest months in real estate in the HISTORY OF CANADA. Because people want even more for their homes and buyers are expecting a price decrease it has created a lot of listings without sales.
YET: despite this “slow down” 7974 properties have been sold in June, as reported by TREB, with properties in Toronto proper selling for nearly the highest average price ever.
As for MOI mentioned in #3, we STILL have a very low number of months of inventory. 2.5 in June is still some of the lowest inventory in the housing market ever.
Similar to Vancouver’s market last year, there was a phase of market confusion. This EXACT same sales trend was shown to investors and owners in the market.
Despite that, once buyers realized that inventory was low and prices were not going down, sellers began to again sell at the highest prices the Country has ever seen in only three months from this supposed “downturn.”
If there is anything to be learned from Vancouver that has had almost the same proportions in market activity during their “cool down period.” Time has made it very clear that this was a temporary lapse caused by FEAR.
This fear was on both the buyer and seller’s ends. With people scared that they wouldn’t get the most for their homes and buyers trying to get homes for below market price- many people had the opportunity to enter into the housing market.
This period of confusion is the BEST time to buy a home or preconstruction condo, townhouse or detached house in the City of Toronto or the GTA. From Oakville to Downtown Toronto- there is no better time to buy with low competition.
To take advantage of this while the opportunity lasts, contact me, Zia Abbas to get advice on the best bang for your buck. With many speculators confused, wise investors are putting their money in now to yield higher returns.