According to the Royal LePage House Price Survey, released April 13, sales activity and price appreciation across the Greater Toronto Area continued to slow in the first quarter of 2018 compared to the heightened pace witnessed during the same time last year. All housing segments studied depreciated on a quarter-over-quarter basis, especially in areas such as Richmond Hill, Markham and Pickering where appreciation was strongest a year ago.
On a quarter-over-quarter basis, the aggregate price of a home in the GTA decreased 2.2 per cent, while the median price of a two-storey home and bungalow decreased by 2.4 per cent and 2.1 per cent, respectively. Condominiums also saw a quarter-over-quarter decline in appreciation, dipping 1.3 per cent.
“After a prolonged period of a heightened seller’s market, potential home buyers across the Greater Toronto Area are finally seeing a window of relief,” said Kevin Somers, Chief Operating Officer, Royal LePage Real Estate Services Limited. “However, new regulations, an uncharacteristically long winter and high home values have pushed many purchasers to the sidelines in certain segments of the market, waiting to see what will happen next.
“Yet, this adjustment period may be short-lived. Despite recent sluggishness in real estate, the Greater Toronto Area’s economy continues to march forward, bringing many new purchasers into the region. Demand for entry-level property is still extremely strong, and properly priced property continues to trade hands.”
Since the beginning of the year, continued affordability constraints and waning consumer confidence have kept many purchasers on the sidelines in the majority of move-up markets across the Greater Toronto Area. Homeowners are also still largely at odds with current market dynamics, holding off on any sale unless they receive top dollar for their property. Together, those trends have stalled sales activity in many of the metropolitan area’s more expensive housing categories during the quarter.
Meanwhile, price appreciation and sales activity have continued to intensify in the entry-level segment across the region. Many baby boomers nearing the age of retirement have started to downsize, competing for property in this segment while also using the remaining equity built up in their houses to help finance their children’s home purchase. New mortgage regulations have also stoked demand within the entry-level segment, diluting prospective homeowner’s purchasing power and nudging them into the relatively affordable condominium segment. This has also enticed boomers to downsize to help their children afford a home before it is completely out of reach.
“Condominiums are now the preeminent housing segment in the Greater Toronto Area, simply because of their relative affordability,” says Somers. “Yet, we must be quick to remember that the sky isn’t falling for the rest of the market. The regression that we’re currently experiencing has been quite minor, and likely won’t hold for long. The Greater Toronto Area is still very much one of the most affordable major metropolitan cities in the world, and the strength of our economy only points to the market and housing demand moving upward.”