Many of my clients have asked me what my opinion is for what lies ahead this summer in the Toronto real estate market. Before taking into account how the new mortgage rules have been impacting the market, it should be noted that the summer months are generally slower to begin with. This is traditionally the time many people go on vacation or just take a break. With the kids off school, people take the opportunity to plan trips and/or just spend time with the family. On top of that, the beautiful weather makes people want to enjoy the warm, sunny days while they can. Accordingly, there are fewer listings on the market, and there are slim pickings for buyers.
The new mortgage rules implemented at the beginning of 2018 also contribute to a slower market. As buyers even putting more than 20 percent down have to qualify for two percentage points higher than the contractual mortgage rate, the number of buyers in the market to purchase a home has decreased. To illustrate, the Toronto Real Estate Board (TREB) announced that the May 2018 sales were down 22.2 per cent compared to May 2017.
So, what exactly does this mean for buyers and sellers? Although there are less buyers and sellers in the market, the average selling prices are still at or above average listing prices. There is still some competition between buyers, perhaps because the inventory is so low, and therefore prices are not dropping significantly as one would think. In other words, sellers are still getting what they want, and buyers have less competition in buying property than they would have had last year.