Be careful what you read folks or at the very least, how you interpret it and understand who is saying it. Draconian headlines continue to fly in the realm of real estate, and they want you to panic.
A recent example is the August 2nd issue of the Financial Post which stated ‘Toronto home sales plunge 40% in biggest drop since the recession’. This was followed up with ‘Home prices in Canada’s biggest city also posted their biggest monthly drop in at least 17 years in July’.
From this type of hype one might ask, could this be the beginning of a major correction or crash? In a word, NO. This is not the case at all.
What is really happening is that the pressure cooker is now simmering down nicely as we head to a more balanced and healthy market. These recent market adjustments are the best thing that could have happened in order to avoid the real estate ‘boom bust’ scenario people were talking about for the past several years. That trend was simply not sustainable. So this is good news not bad news.
In fact, the rate of price increase is now moderating, but prices are not dropping as the headlines would make you believe. Case in point, the average house price in the GTA increased 5 per cent from July 2016.
Are prices dropping, no. Is the froth and frenzy gone, yes and thankfully so. The supply of listings is also picking up, also good news giving home buyers more choice than previously.
This is all leading back to a more balanced real estate market, meaning supply and demand are more in sync.
Will prices drop in real terms year over year? That’s the big question now. Even if they do end up dropping slightly, is that a bad thing? We don’t think so because it could have been worse, much worse.
Many believe that current prices represent the new ‘bar’. With summer vacations now in full swing, the reduction in real estate transactions during the summer (not last year) represents the historical norm.
Realtors believe that sales activity will pick up in the fall and that we may see a mini boom in sales again.
Hopefully though inventory will continue to grow, multiple offers will not return, and market competition will be more healthy and positive.
Mortgage rates remain near all time lows, so if you are thinking about getting into the market in the near future, it is a very good time to make your move!