US & Canada
According to sales data recently released by Toronto Real Estate Board, home sales in the Canada’s biggest city fell drastically in the first month of 2018, with tougher mortgage qualification rules coming into play and borrowing costs rising.
Precisely, Toronto home sales fell by 22% to 4,019 units, compared to sales figures in the year ago period. It was the weakest month of sales for January since 2009. The average price of a home sold in Toronto was $736,783, down 4.1% from January 2017, though changing little from December.
Toronto’s once-hot housing market has been correcting as various levels of government and regulators have effected measures to rein in spiraling prices and soaring debt in the country. Most recently, tougher mortgage guidelines came into play on Jan. 1, making it harder for prospective buyers to qualify for loans. Many buyers rushed into the market in December to get ahead of the rules.
“It is not surprising that home prices in some market segments were flat to down in January compared to last year,” said Jason Mercer, the board’s director of market analysis. “At this time last year, we were in the midst of a housing price spike driven by exceptionally low inventory in the marketplace.”
Hoping for the market to stabilize, the industry group released a 2018 outlook last week that pointed to a slower sales start to the year as the market adjusts to the changes. “As we move through the year, expect the pace of home sales to pick up,” board president Tim Syrianos said in the statement.
The benchmark home price index remained relatively unaffected in January despite the slump in sales, according to Bloomberg calculations. The index has dropped 9% since May, mainly due to falling prices in Toronto’s detached market. The condominium segment, in contrast, has seen double-digit annual growth.
“It is likely that market conditions will support return to positive price growth for many home types in the second half of 2018,” Mercer said.
New listings rose 17% from the same period last year, but it was the second lowest level for January in the past decade. Active listings soared 136% from a year earlier.