GTA house sales drop 22%
'Miserable' data blamed on near-record snowfall, land-transfer tax, but economic impact also seen
Apr 04, 2008 04:30 AM
Realtor Jim Common has been riding high on one of the most bullish markets in Canadian history. Just don't ask him about this year.
"It's been miserable," the ReMax agent said. "Buyers just seem stopped dead in their tracks."
Toronto Real Estate Board data that were released yesterday showed the first quarter of the year was one of the worst in recent memory, with sales falling for three consecutive months. Only 6,631 transactions were recorded during March, down 22 per cent from the 8,518 sales recorded in the same month last year.
The market has been on a downtrend since the beginning of the year. Sales fell a more moderate 2 per cent in January, before experiencing an 11 per cent plunge in February.
While the market was expected to slow moderately this year, no one expected it to dive this rapidly.
Realtors attributed the slowdown to one of the snowiest winters on record that kept people at home, a new City of Toronto land-transfer tax and fewer listings on the market.
"Record snowfall in Toronto left many city streets and sidewalks virtually inaccessible to potential home buyers during the first quarter," Royal LePage senior vice-president Gino Romanese said yesterday. "As a result, many sellers held off listing their homes, choosing to wait for more conducive weather for open houses."
While weather was definitely a factor, Common said he is concerned the drop may signal the beginning of a longer-term trend.
"The economy obviously has a huge impact on this," Common said. "I've had cases where the wife is saying yes to the sale and the husband is holding off and saying, `Let's wait till Friday to see whether my bank stocks are okay.'"
Yesterday, the Royal Bank of Canada released a forecast for Ontario, saying the province was "teetering" on recession as certain sectors of the economy, particular manufacturing, are hit hard by the soaring Canadian dollar.
A report by the bank last month also noted a "significant shift," with the proportion of Canadians planning to buy a home in the next two years falling to 23 per cent, down 5 percentage points compared with 2007.
"The last quarter does imply we are seeing negative growth numbers for the Toronto housing market," said Paul Ferley, assistant chief economist of the bank. But he cautioned that monthly statistics are often volatile, especially coming off record sales in 2007. Ferley said it will take another quarter to substantiate a trend.
Despite the drop in activity, Royal LePage said listing periods are shorter on average this year than last. Listings were also down about 6 per cent from a year earlier. Average prices in the GTA rose to $380,338, up 4 per cent from March 2007.
To assuage fears of a market downturn, Toronto Real Estate Board president Maureen O'Neill said in a release that March's performance "isn't disquieting given that Canadian economic fundamentals are holding steady."
However, she said the board remains concerned about the impact of the controversial land-transfer tax Toronto implemented this year.
"Home sales in the City of Toronto spiked toward the end of 2007 probably in a bid to avoid the tax, but have since dropped off since the introduction of the tax," O'Neill said.
Meanwhile, realtor Common said the spring market that's just underway should give a clearer view of the economy's direction.
"If you don't see good house sales with 14-degree weather and sunshine this weekend, then you know we're in trouble," Common said.
Home prices in Toronto are still forecast to go up moderately by the end of the year, but much depends on what happens with the closely linked Ontario and U.S. economies.
According to a Royal LePage house-price study released yesterday, average prices appreciated in the first quarter, but not in all neighbourhoods.
In North Toronto, for example, two-storey homes appreciated 28 per cent to $775,000, but in the Annex the price of a similar house dropped 6 per cent to $759,000.
On average, a standard two-storey property in Toronto is up 8 per cent year-over-year to $544,150, while condominiums are up 6.9 per cent to $298,662. The biggest winners were owners of bungalows, which increased 11.3 per cent to $432,679.
© Copyright Toronto Star 1996-2008
Text cached at www.AnthonPang.com.