14 Sep 5 Ways The Canadian Real Estate Market has Declined in 2017
Numbers speak louder than words in the real estate world; many expert investors and future home buyers rely upon them to make informed decisions. These statistics are a sign of the state of the market and could help in making a buying or selling decision.
Here are our 5 ways the real estate market has declined in 2017
1. In Vancouver house sales declined by 26% in August 2017 when compared with the same month the previous year. This was a result of the 15% tax on foreign home buyers that took effect on Aug 2, 2016. Toronto also introduced the tax and like Vancouver, the immediate impact was a dramatic drop in home sales. The government took these actions to deflate a potential real estate bubble.
2. For the first time in 7 years, The Bank of Canada has begun to raise interest rates and has increased its overnight rate from 0.5 percent to 1 percent. Experts believe that though small, the change in overnight lending rates will have a big impact on the real estate market.
3. Toronto Real Estate Board (TREB) reports that in August 2016, there were 34.8% more homes sold than in August 2017. While this is a smaller decrease compared to the one experienced in July 2017, this trend is a clear sign that the new regulations are taking effect. TREB adds that the decline is due to rising interest rates and new government regulations.
4. In August 2017 the average GTA home price went down by $15,000 compared to July 2017. This is an indicator the supply of housing is starting to outpace the demand. This trend is likely to keep up in the near future, especially since interest rates are expected to rise even more in the future.
5. Housing has long been the main driver of the Canadian economy, but now, every player in the sector is bracing for a tighter market. After the Bank of Canada’s interest rate increase, the country has seen a decline of 6.7%, in home sales from May to June. This is the biggest drop for any month since 2010 and it is worrying news for those who work in real estate.
The barrage of changes in the market has flipped the relationship between real estate supply and demand in certain parts of the country. Foreign buyers tax and increased lending rates mean that homes are more expensive in the country. The announcement of new rules had an immediate impact and it is uncertain when the market will stabilize.