2018 In Review
Perhaps a tad late to say Happy New Year… however a purposeful delay in the most recent blog so as to interpret the early signs and indicators of the 2019 Real Estate market.
First, a recap of 2018 across the Toronto Real Estate Board. Total sales of residential homes dropped from 92,263 sales in 2017 to 77,426 – a decline of 16.1%. The average selling price went from $822,572 down to $787,300, down 4.3% from 2017. And total new listings dropped 12.7% in 2018.
Many factors contributed to a bear-like market in 2018 most of which, in my opinion, were caused by over-zealous government intervention. Rapid fire mortgage rule changes; increases in lending rates; and provincial housing action plan fallout. Too much too quickly causes the system to react in a very negative manner. Overall, this created a ‘wait and see’ attitude on the part of many home buyers. And the lack of ‘SOLD’ signs showing up on front lawns caused sellers to lose interest in listing. The cycle fed on itself and only the truly motivated buyers and sellers came together in a successful sale.
Likely the most significant impact to the 2018 Real Estate market was the new Federal mortgage regulation. The qualification standard introduced last year meant that ‘would-be home buyers’ had to qualify for a monthly mortgage payment $700 higher than what they would actually have to pay. The bottom line was that many families no longer qualified to buy the type of home they wanted and as such put all purchasing decisions on hold. (Of note, the Toronto Real Estate Board and the Home Builder’s Association have all gone on record that the qualifying regulations have had the required calming impact on house prices and are now negatively impacting the economy.)
So, Where To From Here
One of the best indicators we have coming into 2019 is an IPSO poll of buyer intentions. This poll clearly shows that home buying intentions are back up to the norms we saw a few years ago. 29% of potential home buyers indicated a desire to purchase this year, up from the 26% heading into 2018. With this data, TREB has forecast that total sales will increase by 7.2% and prices will rise by 4.2%. All very good indicators for the year ahead.
How does this optimism translate into our specific trading area. York Region saw a 1% increase in listings year over year; and a 2.6% increase in houses sold this January. This is a good indication of buyer confidence returning to our market. Additionally, what I am seeing is an increase in sales in the entry price point. This is very good news as this could likely trigger a domino effect on sales in the higher price points.
Allow me to explain: Historically we have had a seller’s market early in the year. Too many buyers and not enough homes. As a result, the move up buyers (those selling their first home and buying up) would have to find and buy a home before listing their own home. This was our norm for years.
When the market shifted, the reverse trend occurred. One would have to sell their home first and then go and buy. Too much risk to buy first with the uncertainty of a selling price coupled with the very real possibility of not selling at all. As this is our new norm coming into 2019, to see this early movement of the entry level homes is a positive indicator that our market may be in the early stages of recovery.
And as goes York Region, so likely will South Simcoe County follow. In 2017, when prices spiked, Simcoe lagged behind York by a couple of months. Currently, Bradford and Innisfil continue to have an abundance of inventory with few sales. However, the trend at the entry level point in the market is similarly there and the potential to begin impacting the subsequent levels of housing types is clearly evident.
I am incredibly optimistic as we begin to experience this early 2019 Real Estate market. Our team looks forward to the opportunity of helping all our new and past clients this year. As always, if you have a specific real estate goal this year, or you are just curious about your current equity, please reach out and let’s connect. Our desire is to always be the best Real Estate resource and to provide the very best in a Real Estate experience.
SAVE THE DATE
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Saturday, March 16, 2019
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Stronach Aurora Recreation Centre
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