Toronto's sellers aren't panicking despite correction fears

Toronto's sellers aren't panicking despite correction fears

Toronto

Despite the number of transactions being at their lowest levels since the 2009 recession, sellers in Canada’s largest city have avoided listing their homes en masse in what could be a sign of confidence the market will come back.

According to data released May 15 by the Canadian Real Estate Association, new listings in Toronto fell 8.6% in April from a month earlier and are down nearly 30% from a year ago.

The drop has left the sales-to-listings ratio – a key gauge of a real estate market’s health – relatively stable in the face of a sharp drop in sales, which may explain why prices in Toronto continue to hold steady. Prices are up 3.1% since the beginning of 2018, even as transactions plunged.

“The market is actually surprisingly relatively balanced,” Realosophy Realty Inc. president John Pasalis told Bloomberg. “When you’re comparing yourself to a bubble, sales can fall 40% and inventory can rise and your market is still balanced.”

Read more: Some neighborhoods in Toronto are more valuable than others

However, while the sales-to-new-listings ratio is indeed stable, it remained on the lower end of the range over the past decade. The ratio has averaged 0.46 over the last year, the lowest level since the recession and at the lower-end of what analysts typically consider a balanced market.

Year to date, sales have fallen by a third compared to the start of 2017. New listings went down just 4.7% over the same period.

“It may be that people are trying to time the bottom of the market,” Toronto-Dominion Bank economist Rishi Sondhi ventured. “They’re holding out because they think the market is going to turn around.”

Federal regulators tightened mortgage qualification rules on January 1 in response to a surge in prices early last year. The Toronto market has also been operating under a new foreign buyers’ tax and other measures to curb demand.

 

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1 Comments
  • DeLux 2018-05-17 8:39:52 AM
    Not yet. They are trapped but still carrying on as CMHC default is qualified after 365 days of nonpayment, which gives market so-called "liquidity". In another word, if you can't pay, sell and somebody else will carry on. Until of course, people learn not to get involved unless values are supported by income fundamentals. Real estate boards must be held on a tight leash with their data accessibility to ensure free and democratic markets. Current practice allows obfuscation of prices, DOM, resulting in false YoY. General business malpractice is to list properties and if they don't sell, realtors pull listings off the market and relist in few days with new/lesser price. This resets DOM(days on a market) to zero, masks real motivation of sellers and creates a false impression of a demand. (When houses sit on the market under old listing for weeks or months, then pulled off the market and relists with the new price and sell in days there is no record of how long the subject house was on the market.) Widespread fraud, forcing Competition Bureau representing consumer to litigation against TREB.
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