17 Mar Market Update: The March Break slow down
March break slowed the market down this week in terms of new listings. We should receive a bit of a bump next week with the bulk of new inventory coming after Easter. Into April and May is when we will see how much steam the current rebound has, as that is when the 120 day mortgage qualification holds expire. Basically, there are still buyers out there rushing to buy before having their budget slashed by the new mortgage qualification rules. Many people who applied before Jan 1, 2018, received a 120 day grace period from their bank to find a property under the old rules.
Sale prices of the last few weeks appear to show a broader based rebound happening in the freehold market. I am now seeing more interest in detached houses and more competition in the $1.4-$2M market range. There has been recent news about the luxury real estate market (over $3M) taking the biggest hit in terms of sales when compared to last year. The luxury market typically has a high percentage of foreign investment driving sales, so it is not unusual for the segment to be hit hard by the foreign buyers tax. It also makes sense that many homeowners in the luxury market are comfortable with sitting idle while the market adjusts.
Having said that, many speculate that the few luxury home owners selling today are downsizing into more affordable properties and/or luxury condos. The rich deciding to be more frugal with their money is bad news for average Joe Torontonian, as their slice of real estate may continue to shrink. Reviewing MLS today it is clear that the properties not moving as quickly are speculative in nature and geared toward re-development or investment. If prices continue on the current trajectory and interest rates remain low, it may not be long before speculation picks back up, suppressing inventory further.
-Nick, March 16/2018