GTA properties take twice as long to sell this March
Prospective buyers appear to be taking their time this March before plunging in and purchasing. A Greater Toronto Area property is taking 20 days to sell this month, compared to just 10 days last year, according to the Toronto Real Estate Board (TREB).
That’s likely because of the increase in inventory; this March has two to three months of inventory, compared to just one month the same time last year.
The pressure has eased on prospective buyers as their options have increased. Unlike last year’s market which had record-low supply, buyers are now less likely to be pushed into a bidding wars, or having to exclude conditions from their offers.
That’s good news for buyers, but not so great for sellers.
Last March, sellers held the upper-hand. Prices had increased almost 35 per cent year-over-year, and properties were being sold almost immediately.
That all changed as soon as Ontario announced its Fair Housing Plan last April. Prospective sellers reacted to the uncertainty of government intervention by listing their properties en masse (hence, the increase in supply). Soon after, OSFI, the bank regulator, tightened mortgage lending rules, in effect this January 1. The double whammy of regulations and less funds available to borrowers led to the market slowdown we’re now seeing.
Prices are no longer rising upwards of 35 per cent a year. Instead, they’ve dropped from their peak by 14 per cent.
The average price of a GTA property this March is $748,558 whereas in March 2017 it was $915,126.
Property prices are still trending upwards, however, just at a slower pace. From the year before, in March 2016, the average price was just $688,181, showing two year gains of 8 per cent.
TREB mainly blames detached home sales for the drop.
“Detached home sales, which generally represent the highest price points in a given area, declined much more than other home types,” TREB writes in its monthly market report. “In addition, the share of high-end detached homes selling for over $2 million in March 2018 was half of what was reported in March 2017, further impacting the average selling price.”
Condos, the most affordable market segment, are the only type of property to see year-over-year gains, rising 6 per cent to an average selling price of about $550,000. Spending over half a million on condo, however, is a bit too rich for most buyers, especially with the new OSFI rules. Even if prospective buyers drive out to the 905, the most affordable market segment still seems quite unaffordable. Mississauga condos, for example, are selling for an average of $435,000.
We’re likely to see more prospective buyers look even further outside the metropolitan limits. Buyers can still pick up, for example, detached houses for sale in Hamilton for the same price as a GTA condo.
TREB expects both sales and prices to pick up in the busy spring and summer months, so we’ll have to wait and see.
Click on the infographic to see the details for yourself:
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You may also be interested in: Toronto Detached Homes: Too Expensive to Sell? (Infographic)
Writer: Danielle Kubes
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