Housing markets cooling in Toronto, Vancouver, but prices still high
Published Thursday, July 5, 2012 10:37AM EDT
Last Updated Thursday, July 5, 2012 10:40PM EDT
In two of Canada's hottest and hardest-to-break-into real estate markets, there are signs that the advantage may be starting to turn in favour of buyers.
A new report from the Greater Toronto Realtors association shows the number of pre-owned homes sold last month was down 13 per cent from June of last year in the city, and down 5.4 per cent in the broader region.
In the city of Toronto, 3,520 homes were sold in June 2012, at an average price of $554,077. In the same month in 2011, 4,053 homes were sold at an average price of $511,591.
The numbers appear to indicate a cooling market, which may eventually benefit buyers who will theoretically face less competition and therefore lower prices.
Several recent reports have suggested Toronto's housing market is over-inflated, but there has been little consensus among analysts on when or by how much prices will drop.
Toronto Real Estate Board President Ann Hannah said much of the slowdown in sales is due to the city's Land Transfer Tax.
"Recent polling by TREB suggests that many households are considering home purchases outside of the City of Toronto to avoid paying the Land Transfer Tax. This goes a long way in explaining the disproportionate decline in sales in the city versus surrounding regions,” Hannah said in a statement.
The drop-off in prices follows more than a year of above-average price increases in Toronto. It also comes after Finance Minister Jim Flaherty recently announced a return to maximum 25-year amortization periods for mortgages, meaning many people entering the market will face higher payments each month.
Vancouver’s market cools
Meanwhile, Vancouver's housing market is demonstrating a very similar trend to Toronto. Home sales are falling sharply, while prices have continued to rise.
The Real Estate Board of Greater Vancouver said on Wednesday there were 2,362 sales in June, down 27.6 per cent from the 3,262 sales in June 2011. June sales were also down significantly from those in May, when 2,853 homes were sold.
Detached home sales were down 37.4 per cent while prices climbed 3.3 per cent to an average of $961,600.
For condominiums the story was similar. Total sales for June were down 19 per cent from the same month last year, while prices were up 0.3 per cent to an average of $376,600.
"In the last 10 years we've seen sellers enjoy record-breaking numbers and now you're starting to see that balance come back," board president Eugen Klein told CTV British Columbia.
"This means buyers are facing less competition and have more selection to choose from compared to earlier in the year."
Sales in Vancouver in June sunk to the lowest total for the month since 2000.