This post was prepared by Karla Saa and Surrinder Dhaliwal, RE/MAX West Realty Inc. For more information visit www.karlasaa.com.
As of April 2017, the recent measures to cool down the housing market have left some buyers on the sidelines waiting to see the outcomes. According to data released by The Toronto Real Estate Board (TREB), 21,630 homes were listed for sale in April – a significant 33.6% increase over the same month last year.
TREB notes there were double-digit increases in new listings across all of the particularly tight categories of low-rise homes, including detached and semi-detached houses, as well as townhouses. With the increase in new listings, the prices are expected to level off and potentially decrease slightly.
The new tax imposed on foreign buyers, however, is not expected to greatly affect the market. Data analysis released by TREB says foreign buyers and other speculators do not play a major role in the current market conditions.
Most recently, TREB reported 10,196 sales through it’s MLS® System in May 2017 – down by 20.3 per cent compared to 12,790 sales reported in May 2016. Sales of detached homes were down by 26.3 per cent. Sales of condominium apartments were down by 6.4 per cent.
Active listings – the number of properties available for sale at the end of May – were up by 42.9 per cent compared to the lowest level in 15 years recorded in May 2016. Nonetheless, the number remained below the average and peak during this period.
“The actual, or normalized, effect of the Ontario Fair Housing Plan remains to be seen. In the past, some housing policy changes have initially led to an overreaction on the part of homeowners and buyers, which later balanced out. On the listings front, the increase in active listings suggests that homeowners, after a protracted delay, are starting to react to the strong price growth we’ve experienced over the past year by listing their home for sale to take advantage of these equity gains,” said Jason Mercer, TREB’s Director of Market Analysis.
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This Post Has One Comment
Part of the problem is the change in the approach of the agents. The practice is now a silent auction with no disclosures. Homes are advertised as “coming soon” to generate interest. Agents then bring “offers” which are treated as an auction and all offers are reviewed simultaneously and the buyer then selects the one that is most advantageous. The sale price is posted but the other offers are not disclosed.
Agents in these markets promote sales and will advise their clients that a particular home will sell for over the asking price and will often give a number like $100,000. or other. The justify their claims by pointing to other sales in the area where the sale price was greater than the listing price. The justification is fallacious as it simply points to the problem, there is no disclosure in the actual bidding as is usual in an auction.
It used to be the practice that the first offer was presented and either rejected or countered. Other offers were not looked at until the first offer was dealt with.
I do not believe the issue is foreign buyers or speculators. The issue is the change in sales practices and agents buying to use as rental on the air BnB (there are others who have been sucked into this market as well but from what I have seen the agents are front and center in this practice)
There is something wrong with these opportunistic practices. It is either housing or an investment. When all housing is treated as an investment then where is the housing market? Until the sales practices are changed and buyers purchasing to simply rent out on the “vacation” rental market are discouraged we will have a problem.
The agent practice needs to be full disclosure and a return to the former sales practices, auctioning should be illegal without full disclosure. For the Investment buyer, the vacation rentals, all vacant air BnBs should be taxed at commercial rates and subject to the same conditions and regulations that hotels and bed and breakfast accommodations are subject; there is no such thing as a “shared” accommodation unless the owner resides in the home.