Increased resale listings a sign of cooling?

The Toronto Real Estate Board (TREB) released its monthly resale housing figures for the Greater Toronto Area (GTA) for April 2017, announcing a significant year-over-year increase in resale listings. TREB also provided their key findings related to a market analysis regarding foreign buyers, foreign speculation, and multiple ownership.

In April 2017, there were 21,630 listings reported through the MLS, which is a 33.6% increase. Low-rise home listings increased by the double digits while condo listings stayed the same as last year. While listings increased, there was actually a decrease in sales by 3.2%, falling to 11,630. Is this a sign that the market is already taking a breather due to the recently released provincial measures?   

"The fact that we experienced extremely strong growth in new listings in April means that buyers benefitted from considerably more choice in the marketplace,” says TREB President Larry Cerqua. “It is too early to tell whether the increase in new listings was simply due to households reacting to the strong double-digit price growth reported over the past year or if some of the increase was also a reaction to the Ontario Government's recently announced Fair Housing Plan.”

Even though sales were down and listings were up, the average selling price still shot up by 24.5% to $920,791. "It was encouraging to see a very strong year-over-year increase in new listings,” says Jason Mercer, TREB's Director of Market Analysis. “If new listings growth continues to outpace sales growth moving forward, we will start to see more balanced market conditions. It will likely take a number of months to unwind the substantial pent-up demand that has built over the past two years. Expect annual rates of price growth to remain well-above the rate of inflation as we move through the spring and summer months.”

Foreign buying, speculation, and multiple ownership

In response to the announcement of a foreign buyers tax, TREB analyzed aggregated annual property sales and residential data provided by the Municipal Property Assessment Corporation (MPAC) and Teranet Inc. The analysis focused on data from 2008 to April 2017 throughout the Greater Golden Horseshoe (GGH).   

Here are TREB’s key findings:

1) Less than 1% of buyers have mailing addresses outside of Canada, and most of these are in the US.

2) Only 2.3% of buyers in the GGH were foreign buyers and 87% to 90% of them purchased their homes as a place to live.

3) Homes bought and sold within one year of the transaction accounted for a small share of approximately 5% (less than 5% in 2016 and 7% so far in 2017). These quick flips are by domestic and foreign buyers combined.

4) When it comes to property owners that own more than one property in the GGH, they have a small share compared to the total number of properties available - around 6%.  

"It is not yet clear what impact the measures contained within the Ontario Government's Fair Housing Plan have had on TREB’s market area or the broader Greater Golden Horseshoe,” says John DiMichele, TREB's Chief Executive Officer. “Despite the recent uptick in new listings on TREB's MLS® System, we believe that we all have to be committed to a better understanding of issues affecting demand and supply dynamics in our marketplace. TREB will continue to collect and disseminate data on our marketplace and will continue to work with all levels of government as it relates to housing market policy.”

According to TREB’s analysis, the foreign buyers tax shouldn’t make too much of an impact on the GTA’s real estate market. But who knows, it looks like people are already reacting to the proposed measures. And does this mean the new home market might see an increase in supply? We’ll be keeping a close eye on market activity so stay tuned!