Traditionally, the Toronto spring market’s months of April and May are the most active months for Toronto realtors. 2017 bucked that trend, as March’s record- breaking number of 12,027 homes sold (18% more than March 2016) took many buyers that would have normally purchase in the spring market.
While the 10,196 homes sold in May are great numbers, they are down 20% from May 2016. The listing inventory increased to 18,477 homes and though it’s an improvement, we are still in a Sellers’ market as buyers do not have many choices of homes to buy.
The question of price is a great question. The prices that homes sold in February and March were record breaking prices, perhaps over inflated due to competition and the media. As the market took a breather after 30% plus price increases, those sellers who had bought and were waiting to sell in the spring market are now not getting the prices they expected. Today’s sales are not getting March’s record-breaking prices! Prices are still strong but are down from the prices we saw in March. Sellers caught owning two properties have to adjust their price expectation. The result, prices down. Those sellers pricing their home correctly in the new market conditions are getting multiple offers and selling quickly.
The good news is that the underlying factors that have caused price increases in the Toronto market have not changed. Lack of supply, low-interest rates, high immigration, a strong economy and other positive factors mean that prices will continue to rise at a more normal 4%-7%. But prices will rise!
Some buyers have adopted a “wait and see attitude” before they act, this reduces competition. Over the next two months, Sellers with two homes will reduce their prices so as not to be stuck with two properties. These factors will create a great opportunity to buy before we go back to the type of market we saw last year. Prices will not go up 30% in one month, but the demand is too high for prices not to increase.