With May 2019 sales jumping 18.9% over May 2018, buyer confidence has returned to the market. We’re starting to see property sales exceed the low levels experienced during the introduction of the mortgage stress test. This is a good sign. It means throughout the Greater Toronto Area, buyers are deciding to commit to home ownership amidst the challenging lending environment. Their expectations are much more realistic, and they’re buying the properties that make sense for them financially — the responsible thing to do.
The average price growth is reasonable. In fact I would say it’s moving along at an affordable pace with a 3.6% year over year increase. The mortgage stress test and qualification criteria from lenders contribute to this, affecting the aggressive spike in prices we saw prior to the stress test being introduced. Whether we’ll see this pace continue or not is a matter of time.
What’s surprising about sales in may was the surge in sales of detached and semi’s in Toronto. Detached home sales increased 30.4% while semi’s increased 34.7%. Why is this so surprising? Because the respective price growth didn’t go up by much — a small 1.5% increase for detached, and a decrease of 0.2% for semi’s.
To add to this ‘momentum’ — new listings are creeping up very slowly, while the number of homes for sale are decreasing. If this keeps going, and supply starts to dwindle, price growth will start accelerating again.
This increase in confidence is spread throughout the Greater Toronto Area, and even neighbourhoods that were previously slow, stagnant or even declining have seen more activity this past month. The late start to the spring market may have led to a little bit of this activity spilling over. But we’ll have to see what happens in June to really find out if the market’s confidence in buying real estate is here to stay.
Over the past year, it seems like we’re going through waves of ups and downs, with some flat periods at certain points. So the question is — do you buy in this market?
The answer: it depends.
Do you really need to move? Did you buy a pre-construction house or condo and need to sell your current one to afford it? Are you upsizing… or downsizing? Are you looking to invest?
The key decision making factor to buying and selling real estate, aside from your lifestyle aspirations, should be whether or not you can afford to make a move. Don’t get caught up with emotions, fear of missing out, or sales hype. Ask yourself if your lifestyle requires a move, and if you can afford it.
Another thing I want to touch upon is just how much information is readily available now to everyone who wants to transact in real estate. Sometimes to the point that we can easily become information rich, but insight poor.
What does that mean?
There’s a ton of data available to you right now if, for example, you want to sell your home. Average prices in your neighbourhood, what your neighbours homes are selling for, and data about the general sentiment of the market.
But how do you maximize the sale value of your home? How do you strategically position it so you get the most return on your investment? And what do you need to be aware of which could cost you a lot of money if you make critical mistakes some home sellers make?
If you’re buying, you’re also bombarded with just as much data. Some websites and applications are even employing artificial intelligence to try to match you to the ideal neighbourhood and ideal house. Can data really influence you to make the right decision when you’re buying or selling real estate?
Over the next few weeks I’m going to be sharing some of the answers to these questions with you. Start looking at your real estate move from a strategic perspective so you can maximize the value and benefit you get from it. Relying on market expertise and neighbourhood knowledge is important in this age of abundant information.
I also want to help you become more intentional and aggressive about building your real estate wealth. I’ll be sharing the experience of seasoned real estate investors to help you with the decision making ability you need to invest in the right property. Stay tuned!