With the last long weekend of summer behind us, the fall real estate market is officially here! I hope you all had a great summer.
So, what is happening with the real estate market?
Buyers, Sellers, Realtors and economists alike are all in a tizzy right now over Toronto's housing market and the word "bubble" seems to sway news predictions and repopulate our RSS feeds.
Much of the continuing cooling is taking place in Ontario where recent policy changes by the provincial government have contributed to a welcome shift in market psychology toward more caution. However, only recently have we started seeing headlines that use the words "popped" or "bursting" to describe the state of Toronto's real estate market.
Is the real estate bubble gone?
The dramatic drop in Greater Toronto Area home resale activity during the past four months doesn’t look like a soft landing, and the seasonally adjusted dip since March is not far from the drop seen between December 2007 and December 2008, but if the bubble has popped, it seems to have popped pretty quietly. The housing bubble, which many feared would have extreme impacts across Canada’s economy, is no more (apparently).
SEE ALSO: Expect Canada’s housing market to crash like America’s did? Don’t count on it: Fitch
Does this mean there will be no “crash landing” and is the GTA’s market correction now passing? No one is really certain, but the buzz around this topic seems well worth paying attention to.
Many believe in the real estate industry that the cooling effects of Ontario’s housing plan will only last three to six more months, but they don’t expect home prices to start surging by 30 per cent annually again like it did in the first quarter of this year.
As BMO’s chief economist Doug Porter recently wrote; "This is a late bubble. Bereft of life, it rests in peace," blaming the death largely on new rules implemented by the Ontario government last April. Porter also told CBC’s Metro Morning news last month that we’ve definitely popped the bubble.
However, real estate bubble or not, don’t count on the Bank of Canada to change its course of gradually higher interest rates because the housing market is weakening. After all, that’s what policy changes, particularly in British Columbia and Ontario, were put in place to do.
My outlook for this fall…
I think the market will remain stable through the fall and we can expect any further increase to be modest in the short term as the market stays close to balanced conditions. There are already signs that buyers are starting to look again in the past couple of weeks and are getting ready to dip back into the market.
The big unknown is what the listings are going to be like in the fall. I think we’re going to see a lot of new listings and those who could not sell over the summer months will re-list. If there is an increase in listings more so than of buyers, we’re more likely to have a soft market.
The economists believe that GTA home prices could fall about 6% (on an annual basis) in 2018, but overall, they are optimistic about the health of the banks as well as the broader Canadian real estate market.
Any questions about my post "FALL OUTLOOK: BUBBLE DEFLATED, GONE AND NO 'CRASH LANDING'? I want to hear from you so leave your thoughts in the comment section below.
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