Sarah Niedoba for BuzzBuzzNews
Industry watchers have been holding their breath to see what January would bring for Toronto real estate. How would the market adjust to new mortgage rules and an interest rate hike? Well, the verdict is in — a new report has found a huge sales drop in the first few weeks of the new year.
Data from real estate website Zoocasa has found a 21 per cent year-over-year drop in condo sales in the first two weeks of 2018. Detached house sales fell by 20 per cent, while semi-detached homes declined 15 per cent.
“We did anticipate that the GTA market would be off to a slower start in 2018,” Zoocasa managing editor Penelope Graham tells BuzzBuzzNews. “With the new mortgage rules, you have people who are hesitant to buy or to list, until things settle down.”
The drop in sales has pushed nearly every GTA dwelling type into a buyers market. A sales-to-new-listings ratio between 40 and 60 per cent is considered a balanced market, with ratios above and below indicating a sellers or a buyers market, respectively.
GTA detached houses had a ratio of 24 per cent in the first two weeks of 2018, while condos had a ratio of 26 per cent. Only semi-detached houses remain in balanced territory, with a ratio of 45 per cent.
According to Toronto-based realtor Ralph Fox, it’s important to take these numbers with a grain of salt.
“[We often] look at year-over-year numbers,” Fox tells BuzzBuzzNews. “But at the beginning of last year, the market was appreciating at 20 to 30 per cent — so it’s somewhat unfair to compare this year’s numbers to that boom.”
Fox acknowledges that new mortgage rules have cooled the market somewhat in the first few weeks of the year, but says that in his own work, he’s seen a healthy amount of interest in the market.
“We’re actually quite busy for the first few weeks of January, busier than normal,” he says. “The first couple of months leading up to 2018, there was a bit of an ominous sense of ‘oh what’s the new year going to bring?’ Now that we’re here, people are getting on with their search.”
Fox predicts that sales activity will grow as the year progresses. “I anticipate that the back half of the year will be a lot stronger,” he says. “Once people start to adjust to the new reality of the mortgage rules, things will pick up.”
Graham is also quick to mention that January is typically a slow month for sales, as buyers recover from the holiday season.
“People are still getting back to school and work for the first week of the year,” she says. “So that’s likely bringing sales numbers down as well.”