“Certainly the numbers have dropped. But what haven’t dropped are prices, which is noteworthy. The drop in sales has certainly been because of the psychological impact,” Dianne Usher, SVP, Johnston & Daniel, a division of Royal LePage, told REP. “People are pausing a little bit but certainly, but certainly we’ve got no reason to believe there is no major long-term correction in store. It’s totally what we predicted to happen.”
National home sales dropped 6.2% month-over-month from April to May, according to CREA. That represents the largest sales decline since August 2012.
The most drastic sales decline occurred in the Greater Toronto Area, where the market experienced a 25.3% month-over-month drop.
Activity was also down “significantly” in surrounding areas, including; Oakville, Hamilton, and Barrie.
“Recent changes to housing policy in Ontario have quickly caused sales and listings to become more balanced in the GTA,” said CREA President Andrew Peck. “Meanwhile, the balance between supply and demand in Vancouver is tightening up, while many places elsewhere in Canada remain amply supplied.”
However, while CREA is quick to point to Ontario’s housing plan as the reason for the uptick in listings, Usher begs to differ.
“I don’t think the rise in inventory is because of the housing plan. We saw listings start to increase before that plan was announced. There is a greater number of listings on the market today for a whole host of reasons” including; weather-related issues in the Spring that have delayed some from listing their homes.
As well as an increase in listings that, in previous years, may have been listed in the fall.
“Inventory that we would normally would have in the fall was noticeably light this year. I believe that was due to the uneasiness of the U.S. election,” Usher said. “That inventory is now coming to market. That’s why our supply and demand has shifted so dramatically.”
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Brokers weigh in on Toronto's cooling market
There is no reason to fear a major correction, despite significant sales drop in May, industry veteran argues.