The Toronto Real Estate market is showing the first signs of a slowdown as sales of existing homes in the Greater Toronto Area fell by thirteen per cent in May, compared to April results.
The average Toronto resale price also slowed to $445,593, a 2 per cent increase from the average resale price of $437,600 in April.
Just perhaps, the predicated Real Estate slowdown is starting sooner than later. May Real Estate results for Toronto Real Estate resale prices were the fourth consecutive increase in 2010.
The Toronto Real Estate Board recorded 9,470 sales last month, the first time this year that sales did not resoundingly beat 2009 levels as the market hits a key turning point.
“The pace of transactions slowed in May, following record setting sales in February, March and April,” according to Toronto Real Estate board president ,Tom Lebour.
New listings were also up by 38 per cent over last year, as vendors became more confident in an economic recovery to put their homes on the market. More inventory means more choice for buyers, placing downward pressure on pricing
.
Despite the one per cent drop, this is still the third highest sales for the month of May on record. Average prices were also up by 13 per cent from last May to $446,593 compared with $395,609
.
The market may also be taking something of a breather, as the first few months of 2010 saw substantial sales, with buyers trying to beat mortgage rate hikes. The Bank of Canada raised their key overnight rate by 25 basis points this week as widely expected.
“Buyers who otherwise would have been purchasing a home in May moved quickly this year, likely to get ahead of the hikes,” said Lebour.
Analysts say the comparisons to last year where prices and sales handily beat the first quarter of 2009 will no longer be as outsized as the year stretches on.
May of 2009 was the first month of recovery in a market that had been hit hard by the global economic crisis where sales of homes tanked across the GTA.
But while analysts had already been expecting a slow down in the second half of the year, the pace is coming faster than some expected.
This week the Canadian Real Estate Association joined other analysts by downgrading their forecasts for the year because of weakening markets.
The national average price is expected to decline by 2.2 per cent in 2011, according to CREA. The organization had originally called for an easing of 1.5 per cent in prices next year.
Other analysts say the market may be as much as 25 per cent overvalued in terms of house pricing.
“There is a risk of worsening deceleration” in the housing market, said housing analyst Will Dunning. “The forecasts build in a sharp deceleration of housing activity in the second half of the year and into 2011 as temporary factors that were boosting activity have ended.”
New tighter mortgage regulations introduced last month, in addition to higher interest rates and some buyers who purchased early to try and avoid a new Harmonized Sales Tax in Ontario have all brought sales forward, which will result in a slower market in the second half, said Dunning.
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