Toronto home sales decline continues into June
The number of house sales is still dropping as new listings hit the market.

TheStar.com
June 12, 2017
Tess Kalinowski

Toronto-area lawns are still sprouting “For Sale” signs even as the number of home purchases continued to decline into June, says online brokerage Realosophy.

It found that sales of houses (detached, semi-detached and towns) across the region were down 44 per cent last week compared to the previous week.

York Region is still showing some of the largest declines of about 60 per cent in some areas, said company president John Pasalis.

"The sales numbers keep getting worse,” he said. “It's like they've fallen off a cliff. It's this downward momentum week after week."

Although the Toronto Real Estate Board (TREB) issues monthly statistics, Pasalis said he started tracking weekly sales because the market is so volatile, although he acknowledged that it represents a small sample.

His numbers show that June, so far, is continuing some of the downward trends TREB identified in May. It reported that prices had slipped about 7 per cent from April, although homes still cost about 15 per cent more than they did in May 2016.

In fact, last week was the eighth consecutive week that sales declined, according to Realosophy.

Meanwhile, the number of re-sale homes on the market rose 43 per cent last month compared with May 2016.

It was the fifth week condo sales dropped — 22 per cent — with an 11 per cent increase in the units on the market.

Pasalis thinks that a higher rate of investment buyers in York Region may be one reason that area has seen a dramatic drop since the province announced a foreign buyer tax in April.

But there is no hard data on foreign buyers and speculation anywhere in the Toronto region, so you can't necessarily pin the decline in York on that, said Shawn Zigelstein of Royal LePage Your Community Realty.

There was a 27.7 per cent decline in the number of sales in York from April to May, but prices increased 1.1 per cent in that period, he said.

"This is not doom and gloom. This is not the end of the world. This is an influx of inventory coming into an extremely busy market," he said.

It means buyers have choices and can negotiate conditions such as home inspections.

While sellers won't likely get as much as they might have if they had listed a few weeks earlier, there's nothing to suggest bargain basement sell-offs, said Zigelstein.

Pasalis agrees that foreign buyers aren't likely behind the whiplash-inducing turnaround across the Toronto region, which was so hot the first four months of the year.

"The decline we're seeing now is all consumer psychology. It has nothing to do with any macro-economic indicators or variables,” he said.

“The run-up was people getting anxious, feeling they can't buy and the need to rush into the market. That pushed prices through the roof. Similarly the decline is just people's attitudes about the market. That's the hardest thing to predict," he said, adding that he doesn't expect to see a change before the fall.

"The big bet in September is going to be, ‘how confident are Toronto buyers?’" said Pasalis. "Are they going to be thinking, 'now's a good time to jump in,' or are they thinking, 'this is still insane, I'm going to wait this out'?"

Meantime, buyers who only a few short weeks ago expected they would get bidding wars on their homes are pulling them off the market and listing them at higher prices — closer to what they hoped to actually get.

It's a risky strategy, says Brad Henderson, CEO of Sotheby's Canada.

"We think it works to the detriment of the sellers. Buyers are sophisticated enough to understand what was intended by the first strategy. It doesn't do anything to endear (the sellers),” he said last week. “We would think a home would tend to trade at a discount in a flip-flop kind of strategy.”