The mighty Toronto real estate boom of the past decade seems to be changing as government measures designed to cool the market that was logging annual price increases of more than 30 per cent begin to take effect.
“So far the evidence is in the very short-term, but it does seem the actions on the part of government, along with the history of government — the introduction of the foreign tax — changed the psychology a bit,” said Sherry Cooper, chief economist with Dominion Lending Centres.
“We’ve seen a huge new surge of listings. And we’ve seen it continue, according to the TREB [Toronto Real Estate Board], in the first two weeks of May and buyers have moved to the sidelines a bit.”
Are the tight bidding wars of only three months ago fading into history?
Let’s just say the jury is still out on that one.
“It’s just weird,” said Laurin Jeffrey, a Toronto realtor.
“As soon as that rent control announcement landed, it seemed a lot of buyers wanted to pull out. They’re saying, ‘We’ll wait and see what happens.’ ”
That said, the flood of listings is not exactly as overwhelming as it appeared to be given some recent sky-is-falling media reports.
“The market is still out of whack in terms of supply. Much has been made of a flood of listings. But part of what’s happening here is that there is some bad accounting,” said Jeffrey.
“What’s happening is that a lot of people have pulled their listing and then resubmitted.”
Jeffrey also noted that the number of listings has only spiked in some neighbourhoods. The slowdown seems to be most intense in neighbourhoods popular with buyers from mainland China.
A bit of slowdown could actually be a good thing, said Cooper.
“I was expecting it. The different levels of government were all taking action at the same time,” she said.
“The developments could be a good thing from a macro economic standpoint. Take the example of Vancouver. There the market slowed, and now they have had just an 11 per cent price appreciation. This is not a housing collapse. This appears to be the soft landing that we’ve been looking for.”
“If you can find a property that works for you at price you can stomach, then do it,” said Jeffrey.
“But there is going to be some weirdness this year. We’re going to see three or four months of chaotic prices.”