The Liberal government’s recent unveiling of its 16-point plan to cool the over-heated Toronto real estate market seems to have hit the ‘pause button’ (at least for now) on double-digit price growth in the city.
Buyers Benefitting From More Choice In The Marketplace
In April, inventory levels were up 33% over last year, with sales down 3.2%. This reaction from sellers signals a kind of panic akin to that of the F.O.M.O. (fear of missing out) that many believed was driving the unprecedented growth seen throughout the GTA in the last few years. With home-owners concerned that the market has peaked, new listings are now being pushed onto the market, slowly restoring inventory levels in many Toronto neighbourhoods.
Desirable properties, with effective marketing and pricing strategies are still selling quickly, and setting records. But we’re also seeing a lot of inventory being rolled out ineffectively. These are the listings that have been over-valued as seller’s try and cash-out at peak prices – they’re likely to chase the market downwards, shaving potentially hundreds of thousands off their sale price, seemingly overnight.
The difficulty here for both sellers and their Realtors is that these properties were never really worth that much to begin with. As inventory levels started to dwindle a year ago there was a very real shift as buyers started snatching up whatever they could afford – with their Realtors egging them on to bid higher and higher. All it takes is one frustrated buyer and an over-zealous Realtor to send a neighbourhood’s average sale price into the stratosphere.
With the foreign buyer tax fraught with loopholes (big ones) it’s hard to believe in its overall ability to quell the swell of Toronto home-prices. That being said, the fervor emanating from all this talk of an over-heated market coupled with the Ontario government’s admission that ‘something needs to change’ seems to have resulted in a renewed sense of confidence in home-buyers. They’re starting to say ‘no’ to outrageous property valuations, and we’re seeing some of those listings side-lined until they either reduce their price, or accept an offer less than their asking price.
Expect the next three months to provide needed inventory across the city. With fewer competitive bids, average sale prices should come down between now and the fall. Once the spring market has come to a close, and the full impact of the ‘Fair Housing Plan’ has been realized, it’s our expectation that growth levels will return to normal as we move forward, giving some control back to the buyers, and allowing for more sustainable value appreciation.
If you’ve been actively looking to buy, the next few months should offer you a reprieve from the bidding wars; you’ll likely be able to negotiate on an investment you’re comfortable with. If you’re contemplating a sale – it’s important to have a strategy and a Realtor that can help you navigate a more balanced market.
As always – our team is here to help.