April 2017 saw a mixed bag of activity. Prices for the month of April continued an upward climb with the average home selling for $744,533 an increase of 31.6% from April 2016 which represents a whopping $178,743 price appreciation.
On April 20, 2017 the Ontario Government sensing the unsustainability of the price growth we have seen this year, instituted 16 new measures designed to clamp down on foreign investment and at the same time increase housing inventory. Some of the main attractions of the housing measure includes:
- A 15-per-cent non-resident tax to be imposed on buyers in the Greater Golden Horseshoe area who are not citizens, permanent residents or Canadian corporations.
- Legislation that would allow Toronto and other municipalities to introduce a vacant homes property tax in an effort to encourage property owners to sell unoccupied units or rent them out.
- Expanded rent control that will apply to all private rental units in Ontario, including those built after 1991, which are currently excluded.
- A five-year, $125-million program aimed at encouraging the construction of new rental apartment buildings by rebating a portion of development charges.
These 16 proposed changes along with a sudden rush of inventory onto the market towards the end of April have caused a bit of an easing of the Red Hot Housing Market. By the end of April more homes were reaching and passing their prospective offer dates without selling than at any other time in the last couple of years for example in April 2016 there were 33 homes that had their contracts terminated or suspended without Selling but from April 20th to April 30th 2017 there were 25 in the 10 days alone with 62 for the whole month of April.
Even with the perceived slowdown in the market over the last week in April the month finished with only .6 months of inventory and a 78.5% sales to new list ratio meaning that for all the new listings that came to market 79% of them sold before the month was out.
The Semi Detached housing segment experienced the largest climb in the month of April with an increase of over $200,000 ($203,073) to $698,400 versus April of 2016 representing a 41% increase which are staggering numbers. The average Detached home in Ajax increased by 28.4% to $830,007 and Townhouses increased by 32.6% to $638,475.
I believe that the increase in pricing more so than the new proposed changes to housing rules have led to the sudden increase in inventory that we are now experiencing, as home owners are seeing how much they can potentially receive for their homes and are deciding to cash out as well some home owners may have already purchased a new home with the expectation that they will be able to sell their home quickly. The reduction of sales throughout the GTA(down 3.2%) as well as the increase in inventory (up 33.6%) shows that this may be the case.
I do not expect this to last long however, I feel that sellers may see the slowdown and decide to take their home off the market unless they have already purchased a home also more buyers will start to see homes sitting on the market and consider this as a good time to jump in the market which will simultaneously reduce supply and increase demand again. I guess only time will tell.
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