JUNE MARKET STATS 2017
I’m back this month with June real estate statistics (see attached PDF). In short, here is a breakdown of what has happened in the last 30 days:
- Unit sales dropped 37% in June in comparison to June 2016
- Prices have stabilized at $793,000 – up 6.7% in comparison to June 2016
- Inventory is back to a healthy level of 19,680 listings
The change in the market that is receiving the most attention is the difference in values since the “peak” average monthly sales price in March of this year. It is important to remember average home prices in June 2015 were $639,184 (a record at that time), which means we are still up an incredible 24% in two years.
Double digit percentile price point growth on a monthly basis is not sustainable and we are currently seeing a downward trend in prices as listings continue to increase. Based on what I’m seeing in the marketplace I believe prices will continue to drop while supply increases moving into the fall market.
It’s not all doom and gloom! The first thing I’d like to point out is that you are not a a real estate speculator. None of my clients purchased with the intent of selling within a few months simply on the basis of property value appreciation. Buying a place to a) live in b) rent c) renovate/add value and sell is not speculation.
There were a couple of positive signs within the last 30 days that point to international investors believing in sustainable growth and profitability for the Toronto real estate market.
1.Berkshire buys C$400 million of Home Capital’s common shares and provides 1.5 Billion life line.
My view: I love the optics of this story. A legendary investor with a reputation for never loosing invests 2 billion dollars in a company that was said to be the first sign of Toronto’s real estate market bubble popping like a festering zit… This suggests a huge vote of confidence in our market.
2.Scotiabank’s landmark Toronto tower sells for record $1.27-billion.
My view: Buying a 1.27 billion dollar AAA income property is a long term play. It’s hard to imagine how much money 1.27 billion dollars is. 1.27 billion can buy 1470 homes at the current average sale price – how many Facebook friends do you have? The brains and analytics that go into putting together a deal this size are monumental. Deals like this don’t happen overnight and there would have been several opportunities for the buyers to back out. When the best of the best are making 1.27 billion dollar plays I take it as a good omen for the long term.
The next few months will be interesting. Will the City of Toronto ban Airbnb rentals? Are interest rates going up? Will the bank of Canada tighten mortgage rules? It looks like the answer to all three questions is yes, but we will have to wait and see.
If Airbnb rentals are banned or substantially regulated some property owners will likely be forced to sell as the rental income for such properties will plummet. Properties that sold during peak market with long closings continue to appraise below the purchase price. Properties that fail to close end up back on the market adding supply. As interest rates increase and lending policy tightens fewer purchasers will qualify for mortgages meaning demand will suffer.
Population and job growth continue to be healthy and on a daily basis. Toronto becomes an increasingly desirable place to live. Within the next several years we should begin to reap the benefits of our public transit expansion and infrastructure spending. Companies are already moving their headquarters back to Toronto to take advantage of the talent pool residing in the city. Greater density means increased housing demand.
Not all the news is positive. Changes to lending regulations could have serious implications for purchasers. The changes suggested in the article below would impact the market far more than all the changes, negative news and statistics released within the last 60 days.
3.Brace yourself – a perfect storm is brewing in the housing market
I’ll be following the news and making my own observations daily and will report to you on my findings.
If you have any questions please feel free to call me anytime.
If you know of anyone looking to make a move or in need of a professional realtor they can trust, please send them my way! I’m never too busy for any of your referrals.