Statistics released yesterday by the Canadian Real Estate Association (CREA) show that home sales fell by 1.7 percent in from March to April. While it may appear that regular fluctuation could account for such a small drop, the year-over-year fall was measured at 7.5 percent from last April. Though the market can shift over the course of 12 months, year-over-year change is cited by many experts as a better market barometer because it self-adjusts for seasonality.
Rising housing prices in major cities like Toronto and Vancouver is one possible explanation for the drop in sales. Though the number of new homes listed jumped by 10 percent from March to April, many find themselves locked out of the housing market altogether because of prohibitive costs. This seems to at least be the case in Toronto. Major outliers included Calgary, Edmonton, Ottawa and Montreal. Each of these cities saw sales growth.
In addition to high housing costs, it is theorized that government intervention may also be responsible for the drop in sales, at least in targeted markets. Greg Klump, the CREA’s Chief Economist, stated his belief that “Homebuyers and sellers both reacted to the recent Ontario government policy announce aimed at cooling housing markets in and around Toronto.”
Regardless of the factors holding back total sales, the housing market remained generally profitable, as the average sale price of a home increased 10.4% between April, 2016 and April, 2017. For many, that rise is incentive enough to list a home, especially with the possible fall in sale prices that may come with a declining market. Because, as Klump states, the data indeed “Suggests these housing markets [the Golden Horseshoe] have started to cool.”
Of course, the drop from March to April, and even the year-over-year drop is hardly precipitous. At this point it is unknown whether the turn is a sign that the market is correcting itself, or whether the decrease in sale price will prove to be an aberration.