TREB May numbers show a soft month for Toronto real estate market

While year-over-year prices remained firmly in the double digits last month, home sales in the Greater Toronto Area took a hit compared to May 2016.

Home sales dropped in May 2017 compared to last year, but experts say the trend is likely temporary

Home sales across the Greater Toronto Area were down 20.3 per cent in May 2017 compared to the same month last year. (Canadian Press)

Has the searing Greater Toronto Area housing market lost some of its sizzle? ​

According to the latest statistics from the Toronto Real Estate Board (TREB), the annual pace of increase for the City of Toronto house prices rose by nearly 15 per cent last month, compared to May 2016.

But the volume of home sales, meanwhile, in both Toronto and the Greater Toronto Area (GTA) took a hit. The GTA encompasses the 905 and 416 area codes.

The total average sales drop was –20.3 per cent, year over year, TREB says. 

In Toronto, the declines were:

  • Detached: –26.1 per cent.
  • Semi-detached: –14.1 per cent.
  • Townhouse: –24.3 per cent.
  • Condo: –4.3 per cent.

For the GTA, the drops were:

  • Detached: –26.3 per cent.
  • Semi-detached: –22.7 per cent.
  • Townhouse: –18.1 per cent.
  • Condo: –6.4 per cent.

Compared to this time last year, home prices in the GTA remain high — the average home was at $752,100 in May 2016; a year later, it's at $863,910. If you want to live in Toronto itself, you're looking at paying $899,728.

The number of new sales listings rose by 42.9 per cent last month,  compared to a year ago. 

Prices down from April 2017 to May 2017

Comparing home prices from the last two months, however, tells a slightly different story: the average price of homes in the GTA dropped by more than $55,000 — from $919,614 to $863,910 — in May compared to the previous month.

In late April, the Ontario government introduced 16 measures intended to rein-in home prices, including a 15 per cent foreign buyers tax expansion of rent control; and legislation that would allow Toronto and other municipalities to tax vacant properties. 

Monday's report was the first released by TREB since the Ontario Fair Housing Plan rolled out.

May is often regarded as a strong month for real estate as it marks the end of the early spring sales surge, which, in the Toronto area, saw major price jumps. Interestingly, though, the average price growth rate for each type of home has dropped off from the early spring peak. 

Jason Mercer, TREB's director of market analysis, said in a release that "the actual, or normalized, effect of the Ontario Fair Housing Plan remains to be seen."

Similar measures, particularly a foreign buyers tax, were put into action in B.C. nine months ago, and seemed to have temporarily slowed the real estate mania.

But Mercer thinks that ultimately, the Ontario market will level out.

"In the past, some housing policy changes have initially led to an overreaction on the part of homeowners and buyers, which later balanced out," he wrote. 

"On the listings front, the increase in active listing suggests that homeowners, after a protracted delay, are starting to react to the strong price growth we've experienced over the past year."

With files from Renee Filippone