Greater Toronto Area realtors reported 4,019 home sales in January 2018, a 22 per cent decline compared to a record 5,155 sales reported in January 2017, reports the Toronto Real Estate Board (TREB).
The number of new listings in TREB’s MLS System climbed 17.4 per cent year-over-year to 8,585. However, this figure is still the second-lowest for the month of January in the past decade.
“TREB released its outlook for 2018 on January 30. The outlook pointed to a slower start to 2018, especially compared to the record-setting pace experienced a year ago,” said Tim Syrianos, TREB president, in a press release. “As we move through the year, expect the pace of home sales to pick up, as the psychological impact of the Fair Housing Plan starts to wane and home buyers find their footing relative to the new OSFI-mandated stress test for mortgage approvals through federally regulated lenders.”
The MLS Home Price Index Composite Benchmark increased by 5.2 per cent year-over-year, driven by the double-digit annual growth of the condominium apartment market segment, compared to the single-family segment, which reported relatively flat prices compared to last year. The overall average selling price dipped 4.1 per cent year-over-year to $736,783. This decline was mostly due to the detached segment of the market. In the City of Toronto, the average selling price was up for all home types except detached houses.
“It is not surprising that home prices in some market segments were flat to down in January compared to last year,” said Jason Mercer, TREB’s director of market analysis. “At this time last year, we were in the midst of a housing price spike driven by exceptionally low inventory in the marketplace. It is likely that market conditions will support a return to positive price growth for many home types in the second half of 2018. The condominium apartment segment will be the driver of this price growth.”
Syrianos also said that City Councillors should note the vast difference between the real estate markets of January 2017 and January 2018 at the City of Toronto’s Executive Committee meeting, which was held on Feb. 6 to make recommendations on Toronto’s 2018 Budget.
“The amount of revenue that the City generates from [the Municipal Land Transfer Tax] goes up and down with the real estate market,” he noted. “The last year should be a wake-up call for City Council. They should heed the City Manager’s ongoing warnings of over-reliance on this tax. The Land Transfer Tax is not a good way to fund municipal services.”
The revenue generated by the Municipal Land Transfer Tax is based on the number of real estate transactions and their values. When the Land Transfer Tax was first implemented in 2008, it made up less than two per cent of Toronto’s operating budget, but today, it accounts for seven per cent, a 250 per cent increase.