In the last few weeks we have seen an increase in the number of listings in the GTA and a drop in number of sales.
One of the reasons that contributed to the increase in listings starting late in March, was that a lot of the investors (those who own homes as investment properties) along with those who were planning to sell their home and pushed up their plans to sell in advance of potential policy changes by the government which eventually came on April 20th. Many anticipated that any policy changes implemented by the government would cool GTA’s hot housing market.
Given the fact that only one of the 16-point plan policies have been implemented so far (the foreign buyer tax), the number of listings continue to increase. I believe that there are two reasons contributing to the current trend. Part of the reason may be due to the fact that the buyers are choosing to take the “wait and see” approach. On the other hand, the investors think that the market has had its peaked and they are looking to cash out.
One thing that has NOT happened is a drop in price which is a good thing as many had anticipated a bubble burst. However, a decrease in the growth rate on housing prices was noticed. According to TREB (Toronto Real Estate Board), this past March, home prices were up 33%, compared to the same month in 2016, which is the most competitive I have seen it in the GTA. In April, average house prices increased 24% compared to the same month in 2016. Although 24% increase is still high, it is a good sign that the rate of increase is dropping.
It’s really hard to tell if this is a reaction to the 16 point plan, or if this would have happened anyways. Never the less, it’s encouraging to see a growth in the number of listings this past few weeks. If this trend continues, we will hopefully see more balance market conditions sooner than later. But, let’s not jump to conclusion, since the measures announced by the government are only in planning stages, we will have to wait and see what it’s impact will be on the housing market, and that may take at least a year or longer.
In the meantime, the good news for the investor is that their investment property is still considered a sound investment and no one has to panic about a crash. At the same time, there is good news for the buyers, as the number of listings increase, you will have more options to choose from and won’t have to outbid anyone to buy your home. I think this trend will continue for at least the short term. Those of you interested in buying, the next few months maybe an opportune time to make your purchase.
Stay tuned as I will continue to monitor the housing market and the impact of the 16-pt plan on it on.