York Region real estate housing boom stopped cold in tracks in June

Yorkregion.com
July 10, 2017
By Tim Kelly

What went way up just had to come way down.

That's the real estate story right now, according to someone who should know - Darryl King.

"I predicted back in December, don't think that this (boom) is going to last forever. You knew there had to be a change. It's like driving a car and putting your foot to the pedal and driving it full blast; sooner or later something in that car is going to pop," King said.

Lauren Haw, CEO of Zoocasa, who crunched York Region’s real estate numbers, said the biggest story is the steep drop from April 2017 through June 2017.

“Over that period, we saw a 55.5 per cent decline in sales for detached homes and a 19.3 per cent decline in condo sales, as well as an 11.7 per cent decline in house prices and a 19.3 per cent decline in condo prices.”

King wasn’t surprised the numbers reveal year-over-year sales from June 2016 to June 2017 show a whopping 60.9 per cent drop in detached home sales in York Region. For condos the slide over the same period is less precipitous, 36.1 per cent. House prices were up 7.5 per cent over the same one-month period, but compare that to earlier months in 2017 when the year-over-year comparison showed prices up by over 30 per cent. Condo prices were up 25.5 per cent from June 2016 to June 2017.

King, a veteran realtor who, with his team of agents, sells luxury real estate throughout York Region, said the reason for the drop was simple: a huge glut in housing supply on the market compared to earlier in the year and late last year.

“The supply increased by 47 per cent. Everybody was waiting and wanted to cash out but some waited too long. Where before you only had one house, now you've got 10 on the market and now you can’t sell that house,” said King.

He said early in the year, on the contrary, there were eight buyers for every one house, driving the bids way past the initial asking price.

“From January until May, the market was driving full out. Interest rates were so low, Vancouver had imposed a (15 per cent) foreign tax (that Ontario didn’t impose until mid-April) and we had one of the lowest amounts of listings we’d had in many years,” King said.

“We had an over-surplus of buyers and everybody was getting multiple offers. A good rate of return is normally 4 to 8 per cent a year. In East Gwillimbury, those rates of return were 69 per cent. They’re just not realistic. Now you have an overabundance of houses on the market,” he said in explaining the huge drop in sales and decrease in price increases.

“Everybody was waiting to cash out and some just waited too long,” he said.

Real estate agent Anne Cairns agreed with King, saying: “No doubt the market has slowed down. It has to be assessed in looking at how fast it went up. Nobody was ever going to be able to afford a home, nobody,” she said at late 2016 and early 2017 prices.