There were 7,118 residential sales in the city last month, down significantly from a year ago, but sales through the first 10 months of 2017 also fell by about 19% from 2016.
Gavin Chen of Royal LePage Terrequity Realty says the Fair Housing Plan is the culprit, and that there are no indications that Toronto’s real estate market has flatlined.
“That policy plan was, in my opinion, there to cool the market, but at the end of the day none of the metrics have changed,” said Chen. “Interest rates are still low, borrowing costs are low, immigration numbers are still high, unemployment is low, and everybody is still working and the city is gentrifying more and more. Everybody has to live somewhere.”
Toronto has ascended the ranks of global cities, and Chen says prices reflect that. The city also placed seventh in the Global Financial Centres Index’s (GFCI) ranking of the world’s top financial centres.
“We’re also the third-largest city in North America, and growing bigger and bigger,” he said. “If predevelopments slated for 2019, 2020 and 2021 are any indication, they’re over $1,000 per square foot. Yorkville is already at $1,400 per square foot. You can’t stop progress. We’re a global city.”
While Chen doesn’t see any reason for Toronto’s market to come crashing down—especially the condo sector, which he called robust—he says a few things will perpetuate the cooling effect instigated by the Fair Housing Plan.
“There are a couple of things on the horizon that could affect the market,” he said. “The new mortgage lending rules for conventional mortgages starting January 1 could dampen it. It will erode some buyers’ buying power by 20%.
“Also, to avoid tax sheltering, the provincial Liberals are putting a 73% tax on gains in corporate accounts.”
Josh Klein, a broker with Chestnut Park Real Estate Ltd., says the government should be vigilant about what kind of parameters it sets upon the real estate market.
“The government has to be cautious,” said Klein. “They should be cautious about the restrictions they’re putting on people to gain access to cash to go buy a property. The new B20 legislation impacts consumers’ access to capital to be able to invest in a home.”
Klein is hopeful the government will work out incentives to help first-time buyers, whom he believes will be priced out of the market come 2018, become homeowners with stability.
The market may have bottomed out, but it could back stronger in the spring with more inventory, including family-sized condo units.
“I think the summer was the bottom in terms of transactions and pricing, but I think things will start to move up,” said Chen. “Maybe not in December, but in the spring. There will be more volume in spring and pricing will continue to accelerate.”
Market showing signs of rebounding
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With year-over-year sales in October down 27% from the mayhem of 2016, it may look like Toronto’s housing market is finally flatlining, but one real estate broker says that number is deceiving.