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The Toronto Real Estate Board (TREB) has released their monthly figures on the housing market, showing further signs of market correction following an unprecedentedly strong year in 2017. The latest report shows year-over-year declines in average home prices and residential transactions, while a spike in new listings helped level out market conditions by alleviating strained supply.
A total of 4,019 residential transactions were recorded through TREB’s MLS System in January 2018, marking a 22% year-over-year decline from the record 5,155 sales reported in January 2017. This figure is closely mirrored by an uptick in new listings, with 8,585 listings representing a 17.4% year-over-year increase from the 7,314 new listings entered in January 2017. Despite year-over-year growth, last month saw the second lowest figure for new listings in the month of January over the last 10 years.
A yearly outlook for 2018 released at the end of January considers the effects of new government policies, mentioned in a prepared statement from TREB President Tim Syrianos. "The outlook pointed to a slower start to 2018, especially compared to the record-setting pace experienced a year ago. As we move through the year, expect the pace of home sales to pick up, as the psychological impact of the Fair Housing Plan starts to wane and home buyers find their footing relative to the new OSFI-mandated stress test for mortgage approvals through federally regulated lenders.”
Increases were recorded in overall average selling price, as well as the MLS Home Price Index (HPI) Composite Benchmark. The HPI Composite Benchmark's 5.2% year-over-year climb was largely driven by the condominium apartment market sector, which saw double-digit annual growth versus the single-family home market segment. A 4.1% year-over-year increase in average selling price rose to $736,783, though average selling prices still managed to increase for all home types except for detached houses.
“It is not surprising that home prices in some market segments were flat to down in January compared to last year. At this time last year, we were in the midst of a housing price spike driven by exceptionally low inventory in the marketplace. It is likely that market conditions will support a return to positive price growth for many home types in the second half of 2018. The condominium apartment segment will be the driver of this price growth,” said Jason Mercer, TREB’s Director of Market Analysis.
TREB's January report also raises concerns about the City’s proposed 2018 budget, specifically an over-reliance on the Municipal Land Transfer Tax (MLTT), a concern echoed by Toronto's City Manager. Implemented in 2008, funds secured through the MLTT initially made up 2% of the City’s operating budget. A decade later, this figure has increased by 250%, now accounting for 7% of the budget. The City expects the MLTT to generate $808 million in 2018, a $92 million increase over 2017.
“City Councillors would be wise to note the vast difference between last January’s real estate market and this January’s, given the City’s inadvisable reliance on the Municipal Land Transfer Tax. The amount of revenue that the City generates from this tax goes up and down with the real estate market. The last year should be a wake-up call for City Council. They should heed the City Manager’s ongoing warnings of over-reliance on this tax. The Land Transfer Tax is not a good way to fund municipal services,” reads a statement from TREB President Tim Syrianos.
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