On June 15, 2017 the Canadian Real Estate Association released it’s May data which showed a marked slow down in activity in the GTA region since the government made its announcement in April of a sixteen point program to bring affordability back to the real estate market. See the announcement here.
Crea’s national data shows that the number of homes sold on the Canadian MLS system fell 6.2% in May 2017 compared to April 2017. The largest month over month decline since August 2012. Most of this drop was reflective of a 25.3% drop in the GTA. Activity was also down considerably in other Ontario regions including Oakville-Milton, Hamilton-Burlington and Barrie.
Year over year, sales were down in May by 1.6%, not seasonally adjusted, with gains in 60% of all housing markets contrasting a drop in the GTA of 20.8%. “Recent changes to housing policy in Ontario have quickly caused sales and listings to become more balanced in the GTA,” said CREA President Andrew Peck.
Nationally, new listings in May went up .3% following 10% in April. National sales to new listings ratios are back into a balanced market for the first time since 2015, leaving the wild sellers market of the last several months behind.
Prices in the GTA fell on a month over month basis and year over year were still positive but down from the peak levels posted in March.
For further info check out Dr. Sherry Cooper’s blog http://ow.ly/qW4w30cD3iM
Crea Stats http://creastats.crea.ca/natl/index.html
So all in all, it appears that the housing market is cooling a little but not the drastic “burst of the bubble” that we feared.
Federal government may be eyeing interest rate increases.
Of course, another factor that might affect the housing market is a potential increase in interest rates. Rate increases may cause a rethink of home purchase plans for many buyers, slowing the number of homes sold at any given time. Although many of us have seen what a sharp drop in home purchases may have caused in the past, I feel reassured that there is control of where our interest rates are going and we should expect a managed landing.
According to Stephen Poloz from the Bank of Canada said “It’s isn’t time to throw a party, but it does suggest that the interest rate cuts we did two years ago have done their job, and that’s important to us,” Poloz said Tuesday. http://ow.ly/185j30cDlaC
*Important signals in the economy that prove that there is widespread improvement include –
- An upward trend in growth worldwide including positive growth in the US in investment, construction, consolidation of retail stores, low unemployment and more
- The Canadian economy shows strength in overall job growth, exports are trending higher, Alberta has begun to recover from the oil slowdown and the wild fires
- Canada is now leading the G7 in population growth mostly due to immigration
- There has been a surge in business investment in Canada and BC has enjoyed the highest increases in GDP in Canada
*With excerpts from Dr. Sherry Cooper presentation at NDLC conference June 8, 2017. See the presentation.
There is a feeling that the current interest rates have bottomed out considering how low they have been kept and now that there is considerable improvement, even with some factors looming like the renegotiation of NAFTA, home ownership and the effects of housing on our economy may cause a positive trend towards an increase in the rates by the Bank of Canada.