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Confused Market Perceptions Due To Artificial Snow In June

July 11, 2017

June 2017 - The New Street Resale Real Estate Report for The Greater Toronto and Hamilton Region

Last month, we concluded that the market was affordabilizing (a word we coined in May to describe the positive demand in affordable homes). This month we're seeing some similar trends but we're dealing with 30 days of entirely new data, so let's get into it.

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So what happened in June? It theoretically started snowing. If we look at the average price of a home in the GTA and the Hamilton-Burlington area, we see that prices are back to where they were in January-February of this year. Both regions took a dip from last month between 8-9% but we're still in the same place we were when the flakes were dropping this year. If you think back to then and now, things have definitely changed drastically.

GTA & Hamilton Homes Sales Stats – June 2017

So what has changed? First of all, it's not snowing anymore. Secondly, the perception of the market is the biggest change. We've become so accustomed to annual double-digit jumps in price that when that trend stops and the market balances out, everybody freaks out a little bit (as if they saw a snowflake drop on a summer day). Homebuyers are quick to sell meanwhile buyers are more skeptical. This is having an overall effect on the volume of sales and how quick homes are being sold. Comparing data is important as it allows us to gauge where the market is in comparison to previous months and years. Think about the current state of the market. Homes are selling between 15-18 days on market. 9395 homes were sold in June across the Greater Toronto and Hamilton regions. The average price of a home in the GTA is almost $800,000 and the average in Hamilton is well over half-a-mill. Overall these numbers are very impressive when compared historically. These average prices are similar to those that we saw in January and February of this year, weeks after a record-breaking year where everyone referenced the real estate market with outrageously positive perceptions. Something interesting to note from the stats shown above is the decrease in new listings from May. We saw a lot more new listings than sales last month. This trend was still evident in June but the total amount of new listings is about 24% and 14% less in GTA and Hamilton respectively from the previous month. Right now is a great time to buy as the market is currently oversupplied and buyers have many options. As sales continue to trickle in and homebuyers stop rushing to list their home, we will most likely start to see a balance back in the positive direction we're used to seeing. Let's take a close look at some GTA stats by home type.

GTA Sales & Average Price by Home Type - June 2017

Toronto & Hamilton Real Estate Stats by Home Type Detached Semi Detached Townhouse Condo - New Street Realty  

Hamilton & Burlington Sales & Average Price by Home Type - June 2017

Hamilton Burlington Resale Stats - Freehold Condominium June 2017  

Similarly to last month, we are continuing to see "affordabilization" occurring in the GTA & Hamilton. We coined this term for our May 2017 New Street Resale Real Estate Report as a reference to the fact that affordable homes, like condos and those on the outskirts of the GTA, are not seeing much effects from The Fair Housing Plan and are becoming increasingly popular. Freehold home prices in the Hamilton Region dropped by 9% from May, but were still 9% up from June 2016. Condos in the Hamilton area on the other hand were aligned with last month and are up by 19%. Although most cities saw a consistent dip from last month, communities like Flamborough, Dundas, Dunnville and Caledonia were in the green supporting our concept of "affordabilization". In May within the GTA, we saw some steep average price drops in Richmond Hill. In June we saw that come to a halt with the average price of a home frozen at just over $1,100,000.

Generally, prices in all cities are up from last year (a record year for the region) by a healthy percentage. We've gone back in time to the Winter of 2017 but not by accident. The market didn't balance itself out. This real estate slowdown was forced through the Fair Housing Plan legislation. It's almost as if the government made it snow in spring, that's how artificial the current market state really is. As you probably heard, the Fair Housing Plan was made up of 16 factors. One of the most debated factors which was supposed to have the biggest impact was the foreign buyers tax. With new data showing that only 5% of the market is made up of foreign buyers, we're realizing now that this won't have a significant effect on the market in the long-run. Overall, this legislation, along with the other 15 factors that aren't worth getting into, haven't had much of a direct impact on the market in my opinion. The biggest cause of the slowdown has been through the perception of "fear of a market crash" caused by this plan. Homebuyers rushed to list while buyers are thinking twice before signing an agreement.

Ultimately, the plan did what it was supposed to do; balance the market and make it more affordable for new home buyers. We'll see where things go from here but considering what happened in Vancouver, the fact that the luxury market is seeing record sales numbers and the drop in new listings in June, our forecast is that we'll see average real estate prices hit a plateau very soon. Due to this, listings will start drying up in a month or two as sales start to pickup and we'll be back in a healthy balanced market. See below for sales and prices stats for cities within the GTA and Hamilton.

Hamilton & Burlington Prices & Sales by Community - June 2017

Hamilton Burlington June 2017 Real Estate Stats by Community Ancaster Waterdown Dunnville Brantford West Mountain Downtown Hamilton Beach

GTA Prices & Sales by Community - June 2017

June 2017 GTA Real Estate Stats on Map - Toronto Mississauga Oakville Caledon Brampton Richmond Hill

 

You have to dig deep on the data to reveal the full story. We’re just scratching the surface here. Download the full report to see real estate stats for various cities and communities throughout the GTA and Hamilton.

 

Data Compiled by New Street from TREB (Toronto Real Estate Board) and RAHB (Realtors Association of Hamilton-Burlington). In association with Right at Home Realty Inc., Brokerage, 5111 New Street, Burlington, ON L7L 1V2. The information here is deemed reliable but not guaranteed by New Street, TREB or RAHB. Not intended to solicit listed properties or buyers under agency agreements.

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