Toronto home sales dip in sign that real estate market may be cooling down
A real estate sold sign hangs in front of a west-end Toronto property Friday, Nov. 4, 2016. (Graeme Roy/The Canadian Press)
Toronto home sales dipped in April compared to a year ago, a sign that Canada's hottest housing market may be cooling down, though prices continued to climb at a dizzying pace.
The Toronto Real Estate Board reported Wednesday that the total number of transactions last month slipped 3.2 per cent from a year ago.
Meanwhile, the average price for all properties in the Greater Toronto Area in April rose by 24.5 per cent year-over-year to $920,791. In March, prices skyrocketed by 33.2 per cent.
The data came two weeks after the Ontario government announced more than a dozen measures aimed at cooling runaway house prices in the Toronto area, none of which have yet taken effect. Among them is a 15 per cent tax on non-resident speculators in the Greater Golden Horseshoe, a fast-growing region that stretches from the Niagara Region to Peterborough, Ont.
Listings shot up 33.6 per cent from a year ago -- the greatest year-over-year increase in at least seven years, TREB said.
Jason Mercer, TREB's director of market analysis, said it is premature to say whether the influx of homeowners putting their properties up for sale is the result of soaring prices, which make it tempting to cash out, or of the province's new measures.
"It's too early to say whether it was just homebuyers reacting to the strong price growth that had been reported through the first quarter, or if there was some impact from the policy announcement," Mercer said.
TREB also released fresh data indicating that speculation and foreign ownership make up a small component of the city's housing market.
Between 2008 and April 2017, the average share of foreign buyers of properties in the Greater Golden Horseshoe region was 2.3 per cent. TREB said its analysis was based on property assessments and land registry data in the province.
During the same time period, the share of homes that were bought and sold within one year of the original transaction -- an indication of speculative activity -- was also low, TREB said.
Less than five per cent of transactions fit that definition last year, but that number rose to seven per cent in the first four months of this year, a trend that may indicate that rising prices have lured more speculators into the market.
"When you're seeing price increases month-over-month of thousands of dollars -- sometimes hundreds of thousands -- some people would look at that as an investment opportunity to buy and sell quickly," said Tom Storey, a sales representative with Royal LePage Signature Realty.
Ontario Finance Minister Charles Sousa downplayed TREB's statistics, suggesting he wanted to wait for more data to determine how much foreign buying is in the market.
"(TREB is) taking data from addresses on the transactions, but TD economists and others have suggested it may be higher," Sousa said. "We do know that once Vancouver instituted a non-resident speculation tax it immediately spiked up activity in the Toronto area."
The government hasn't yet introduced legislation that would impose the tax on non-resident speculators.
Nonetheless, Sousa said he believes the measure is already having an effect.
"Obviously just the degree of discussion that we've engaged around this has put an alert out to speculators: you're going to have to pay your fair share, be it domestic or be it non-resident Canadian."
With files from Allison Jones.