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The latest monthly report from the Toronto Real Estate Board (TREB) shows a continued decline in new home sales in the Greater Toronto Area. A total of 7,228 residential transactions were recorded in the month of March, marking an almost 40% decline from the record 11,954 sales reported in March 2017, and a 17.6% drop relative to the March average over the last decade. During the same period 14,866 new listings were recorded, down 12.4% year-over-year and 3% lower than the 10-year average for March.
TREB President Tim Syrianos states that this drop in market activity has been predicted for some time, referencing a recent Market Outlook report reiterating “that Q1 sales would be down from the record pace set in Q1 2017”. Mr. Syrianos expects home sales to pick up in the third quarter, stating that “the effects of the Fair Housing Plan, the new OSFI-mandated stress test and generally higher borrowing costs have prompted some buyers to put their purchasing decision on hold. Home sales are expected to be up relative to 2017 in the second half of this year.”
Unsurprisingly, prices have dropped year-over-year from the frenzied period of sales witnessed in March 2017. The MLS Home Price Index Composite Benchmark was down by 1.5%, while the overall average selling price was down by 14.3% compared to last year. Detached home sales—usually the highest-priced home type—saw the most pronounced decline, with high-end detached homes priced above $2 million selling at half the pace recorded last year.
TREB’s Director of Market Analysis, Jason Mercer, stresses that March 2017 and March 2018 are very different periods that are difficult to compare. “Last year, when we had less than a month of inventory, versus this year with inventory levels ranging between two and three months. It makes sense that we haven’t seen prices climb back to last year’s peak. However, in the second half of the year, expect to see the annual rate of price growth improve compared to Q1, as sales increase relative to the below-average level of listings.”
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