Nearly six weeks has passed since the Liberal government introduced the Ontario Fair Housing Plan to try and cool the GTA’s housing market. Let’s take a look at three things:
- How the May 2017 numbers performed compared to May 2016 and April 2017
- What buyers and sellers should expect when in the market over the coming months
- Predictions of what’s to come moving forward
Part 1: The Numbers
I’m going to give you both the GTA average numbers and, because this is a Mississauga specific blog, the Mississauga market numbers as well.
Let’s start with the GTA:
These are the number of sales and average price for the COMBINED Toronto Real Estate board communities. Now, there are several numbers that you will undoubtedly read in the paper about the May 2017 market.
They are as follows (year over year):
- Listings are UP by 42.9%
- Sales are DOWN 15.1%
- Prices are UP 14.9%
That’s the gist of it. That’s what you can throw around at cocktail parties. But, if you want to sound a bit more knowledgeable, let’s dive into it in a little more detail.
First, May is not the first month that saw declines in key areas. Those first happened last month when the changes took affect on April 21st. However, the decline was minimal and some of it could be explained away by the presence of a late Easter.
Second, the listing numbers will always be a little inflated in a month where the market makes some changes. Many people will have realized their multiple offer strategy failed, and will cancel their listing and re-list it. That counts as 2 listings. So, the number of listings will certainly be higher.
Next, sales are down but you can see that certain segments are more affected than others. For example, the condo market has been more insulated from the changes than the detached market.
Finally, this is the one that many in the real estate industry will point to. Sales are still up nearly 15% from last year. Well, that’s all well and good but weren’t prices up 25% year over year just last month? Now you’re thinking. To really see the affect the changes have made so far we need to look at last month’s numbers and compare them.
April 2017 vs May 2017
I’ll spare you the eyesore graphic here, so just take my word for it. Here’s how things played out:
- Listings are UP 19.5%
- Sales are DOWN 12.3%
- Prices are DOWN 6.2%
So, as you can see, both listings and sales followed the same trend, but prices are down from just last month. Is the same true for Mississauga? Let’s take a look:
Mississauga Market Update
The Mississauga market followed the general trend of the GTA in a year over year basis, and it did as well when looking at April vs May 2017. Have a look below at the figure:
Some key numbers not in the chart:
- Detached sales did not change at all. 398 homes sold in both April and May. However, prices were down 8.2% in May.
- Semi-detached prices were down 4.5% and townhomes were down 6.4%
- Condo towns, which make up a MUCH greater percentage of towns for sale compared to freehold, were down just 3.6% and sales remained relatively unchanged.
- Condo apartments sales were down slightly but prices went up 0.6%.
Lessons We Learned About Mississauga
- Sales were down significantly less than the GTA as a whole.
- Prices fell less than the GTA as a whole.
- New listings were UP more than the GTA as a whole.
I hope that analysis was simple to follow, but I’ll sum things up here. While listings were way up and sales were down, prices did not fall by as much in Mississauga compared to the GTA average. In fact, the condo market actually continued to climb which is a testament to the belief in Mississauga’s downtown plan and future.
So, if you purchased a detached home this month, congratulations, you saved yourself nearly 5% compared to last month. Or, to put it in other terms, it’s like you went back in time and purchased in mid-to-late February. Kind of puts it in a bit more perspective, right?
Whenever you read articles or headlines please keep in mind that they are averages over a HUGE geographical area. You have to look more locally to see the effect on your own personal real estate.
While general trends can be used, it’s best to narrow down to your community. And, even more so, down to your neighbourhood. So, if you have specific questions about your neighbourhood, let me know and I’ll pull the numbers for you.
As we can see, detached homes at the top of the market were hit the hardest. That’s to be expected and could be predicted. Homes at the bottom of the market were least affected. Again, we could predict that.
How you ask? Read Part 3.
For now, let’s take a look at what buyers and sellers should be doing next.
Part 2: Buyers, Sellers…Your Expectations
The market hasn’t crashed and you won’t be picking up detached homes at 2009 levels. You can, however, expect the following:
- More Choice – listings are way up as sellers test the market to see if they can cash in on their properties.
- Less Multiple Offers – many properties are not holding back offers and agents are beginning to understand they need to price things more accurately.
- Competition in Best Areas – not all competition is gone. Well kept, well staged and well priced homes in the best neighbourhoods are going to attract the long line of buyers still out there in the market including yourself. Don’t expect every home to sell under asking and at your convenience.
- Prices Likely Lower – sales will be up on a YoY basis, but will likely be lower than earlier in the year.
- Sell First, Buy Second – the prevailing wisdom here has changed.
Buyers, this is the chance you have been waiting for. Get out there, especially in the summer months, and hunt aggressively for homes. The return of the fall market is an unknown in terms of supply and my long-term bet is against the real estate market coming back to the more affordable levels of just a few years ago. Remember, if you already own, it makes sense to sell first and then purchase after.
You need to change your expectations and quickly. Here’s what you can expect:
- Get it Ready – Your outdated 1974 home will not get multiple offers.
- Price Adjustment – You will likely not get a record high price for your home.
- No Offer Dates – Do not try to hold multiple offers. Price it accurately and take all offers seriously.
- Use a Professional – Now, more than ever, this information needs to be repeated. Stage, market and price accurately.
- Sell before Buying – Again, it’s best right now to secure your sale first.
This is not a bad time for sellers. Keep in perspective that prices are still up big time from last year and if you’ve owned a home for even as short a time as 18 months ago, you’ve done fantastically well. Since 2009, most home values have more than doubled. So, your home and investment have done well and now it will take just a bit more work to capitalize on it. Hire a professional, get it ready, sell it and go hunting for the next one. Price-wise, it’s all relative if you’re moving up or down in the market.
Part 3: What’s Going to Happen Next?
This is always the hardest part of the job. The market is an impossible thing to predict and, as we saw in April, there are unforeseen factors that can have an impact on it.
However, we do have some recent history to go off of to make some predictions. Just 9 months ago, Vancouver introduced their Foreign Buyer Tax. And, much like here, listings went up, sales plummeted and prices fell.
But, what happened next?
Things started to stabilize. The condo and other affordable segments of the market (namely towns) felt the least affect of the changes. It was the top of the detached market where effects were felt the most. And now prices have climbed back up to record highs at a much more sustainable pace going forward.
I believe that, if no other measures are introduced or economic factors affect the market, that we will see a similar pattern follow that of Vancouver’s market. That means buyers should get moving before sellers realize they should just hold onto their properties awhile longer until supply becomes restricted again.
Long term forecasts are even harder to predict as we don’t know what the government will do with interest rates in response to the US Federal Reserve’s increases and potential further increases the rest of this year.
However, I still don’t see an apocalyptic type crash bringing houses back to the level of just a few years ago. Even a massive 20% crash in the market would only see pricing return to 2016 levels. Despite the changes, I believe there will be long-term stabilization ahead for us after a headline-buzzing few months ahead.
I’ll be back in the Fall to see where we end up. Enjoy the ride…
In the meantime, if you need to reach me you can call me directly at 647-231-6119 or email me at email@example.com.