People Are Less Willing To Go Crazy And Pay Anything
A report from the Globe and Mail in Canada. “A sharp drop in the number of luxury sales in the Greater Toronto Area pulled down housing prices nationally last month as the country’s largest real estate market cools off and braces for higher interest rates. The slowdown marked the fourth consecutive time that sales volume fell month over month in Canada. Economists say a new tax in Ontario has crimped demand in the GTA while the housing supply crunch has eased. ‘Further monthly declines – albeit more modest – are likely in the near term,’ Royal Bank of Canada senior economist Robert Hogue said in a research note. ‘Market psychology clearly has changed since April in the region. Gone is the earlier frenzy.’”
From Better Dwelling. “Toronto’s detached real estate is having another rough month. Numbers from the Toronto Real Estate Board (TREB) show that buyer indecision provided substantial downward pressure to the detached segment in July. One of the city’s most affluent neighbourhoods, Bayview Village/Hillcrest Village, saw the greatest declines. The benchmark price for a detached in that neighbourhood fell to $1,532,100, a $205,200 decline from the month before. Sales showed large declines, posting the worst number for July in at least 5 years. TREB saw 2,434 sales, a 47.4% decline from the same time last year.”
The Toronto Star in Canada. “Broker Gurinder Sandhu says he is cautiously optimistic that the psychological pause homebuyers have exercised since the provincial housing announcement, which included a 15 per cent foreign buyers tax and expanded rent controls, will end in the fall and the market will return to normal. ‘We haven’t had a normal market in a long time,’ said the executive officer/owner of Re/MAX Realty Services.”
“The return to equilibrium is better for buyers and sellers, but those listing their homes need help recalibrating their expectations, he said. ‘We are not in the market we had in the first four months of the year. That was a fantasyland. That was short-lived but now we’re back to a market where houses are not going to sell in a matter of hours,’ said Sandhu.”
The Business News Network. “The real estate industry is ‘holding its breath’ as regulators look to extend tough mortgage rules in the face of a sharp slowdown in the country’s largest market. Canada’s banking regulator, the Office of the Superintendent of Financial Institutions, is taking aim at the uninsured mortgage market – where homeowners make a down payment of 20 per cent or more. OSFI is proposing stringent stress tests for those borrowers, in line with what’s already happening in the insured market.”
“The period for public comment on the proposal - formally known as Guideline B-20 - ends on Thursday, but the industry is already sounding the alarm over the potential fallout. ‘We need to question whether regulators want to add momentum to this slowdown,’ James Laird, co-founder or RateHub and president of Canwise Financial, told BNN in email.”
“‘If this stress test goes through as it currently reads, it would cause a large number of current borrowers and buyers to be pushed into alternative and subprime mortgages,’ Bruce Joseph, principal broker at Anthem Mortgage, told BNN via email. Still, Joseph says Guideline B-20 is the kind of tough medicine the housing market needs. ‘This sector typically has much looser standards, and a large scale push towards more prudent lending at this point - although negative for home prices - is a move towards long-term stabilization in the financial system,’ said Joseph. ‘If they were in place prior, it would have prevented many of the structural economic issues we now face.’”
From CBC News. “As the Hamilton housing market’s fever continues to break, ‘reduced price’ and ‘new price’ listings are popping up from realtors around Hamilton. A listing for a house a block from Locke Street South in the Kirkendall neighbourhood screams, ‘JUST REDUCED!!’”
“Realtors tend to be an always-sunny lot, and not all who’ve dropped asking prices were willing to talk to a reporter about it. But the ones who did all agree that the era is gone of blind bidding, paying more than $100,000 over asking price and forgoing all conditions in Hamilton’s housing market. There’s less competition by buyers in general, but especially for fixer-uppers that might have still attracted a fistful of generous offers back in the frenzy days.”
“‘The market has changed; the landscape has changed,’ Doug Tunis, the broker and manager of more than 300 realtors at of Royal LePage State Realty. Tunis said the learning curve a couple of years ago was for buyers – agents would take them through a couple of unsuccessful bidding wars and they would realize how competitive it was. Now, he said, the learning curve is for sellers, who think their realtor’s price is way off-base – on the low side.”
“‘They’re saying, ‘My friends, my neighbour, he had 17 offers and he was listed at $899,000 and now you want to list mine at $799,000 and test the market?!’ Tunis said. But if that friend listed six or even three months ago, things have changed since then, he said.”
“‘We have a bit of a adjustment to make coming off of this frothy market,’ said Donna Bacher, past president of the local realtors association. ‘There’s less competition for the fixer-uppers,’ she said. ‘People are less willing to go crazy and pay anything for that. (Buyers) are able to put in conditions, and sellers aren’t being rewarded for deferred maintenance – which we were seeing a lot of.’”
The Barrie Examiner. “To get a firm grasp on the last six months of the central Ontario real estate market, Toronto Real Estate Board’s Stratus System punched out some numbers based on homes sold and inventory available in July 2017 versus when the market was hot in March, and compared them to this time last year. In Barrie, there are currently 685 active listings. Slightly more than 200 homes were sold in July at an average selling price of $471,822.”
“However, in the height of the real-estate storm in March, 272 homes sold but there was very little inventory with only 294 homes for sale at an average sale price of $570,199. One year earlier, there were 260 homes for sale and 208 sold in July at an average price of $433,147. While year-over-year average house price is up about 8%, the average sale price has dropped since March by 17%.”
“Peggy Hill, with Keller Williams Experience Realty, said the over-heated market had already started cooling before the provincial government stepped in. One in every four real estate offers had problems, she said, adding at the height of the storm, in one evening they had 33 offers on the same home. ‘I think buyers were tired of fighting and just backed off on their own,’ Hill said.”
From Insauga. “This, it seems, is good news. According to CREA, a national sales-to-new listings ratio of between 40 and 60 percent is generally consistent with balanced national housing market, with readings below and above this range indicating buyers’ and sellers’ markets respectively. ‘Based on a comparison of the sales-to-new listings ratio with its long-term average, more than 60% of all local markets are in balanced market territory,’ CREA writes. ‘In the Greater Golden Horseshoe region, housing markets that recently favoured sellers have become more balanced, with some beginning to tilt toward buyers’ market territory.’”
“Could it be? Could we really be swinging back towards a buyers’ market after months of wild over-asking offers and bidding wars and open houses packed with hundreds of desperate prospective homeowners? As far as prices go, data indicates that the frenzy is indeed over.”
From Global News. “Is a lack of supply really behind sky high prices in the Toronto market? New analysis by Bloomberg using data from the 2016 Canadian Census suggests that may not be the case. The report found that Toronto grew by 146,200 households between 2011 and 2016, but that over the same time period 175,825 new homes were built. That suggests a surplus of nearly 30,000 homes.”
“The other big question is whether a supply glut could actually prompt a correction. Half of young adults in Toronto live with their parents — the highest ratio in Canada — which according to bank economists is actually slowing household formation.”
