A return to balance. .Calmer, more buyer-friendly markets..That’s how the real estate boards in the Greater Toronto Area (GTA) and the Greater Vancouver Area (GVA) are describing how their housing markets fared in May..Both areas are the main targets of the Bank of Canada’s three rate increases so far this year, designed to flatten house prices and put the brakes on inflation..Continuing a trend that began in April, sales in the GTA were down on a monthly and yearly basis, while new listings increased..More balanced market conditions have provided buyers with more negotiating power and while selling prices are still above last year’s levels, they have trended lower on a month-over-month basis, says Toronto Regional Real Estate Board (TRREB) president Kevin Crigger. .“Bank of Canada rate hikes, including the 50-basis point hike on June 1, are impacting home buyers in the short term. There is now a psychological aspect where potential buyers are waiting for a bottom in price. This will likely continue through the summer,” says Crigger..“However, as home buyers adjust to higher borrowing costs, housing demand will be supported by extremely low unemployment, high job vacancies, rising incomes and record immigration.” .Sales in the GTA in May were down 38.8% from May last year and down 9% from April..Active listings increased by 26% on a year-over-year basis. .The average selling price was still very high when compared other major markets, other than the GVA, at $1,212,806, a year-over-year increase of 9.4%. .The MLS Home Price Index Composite Benchmark was also up on a year-over-year basis by 23.9%..On a month-over-month basis, however, both price metrics were lower, reflecting more balanced market conditions, says TRREB chief market analyst, Jason Mercer..“Price trends observed over the past three months, both in terms of moderating annual growth rates and the recent month-over-month dips, are in line with TRREB’s forecast for 2022,” says Mercer..“After a strong start to the year, the current rate tightening cycle has changed market dynamics, with many potential home buyers putting their purchase on hold. This has led to more balance in the market, providing buyers with more negotiating power.”.On the west coast, spring ushered in calmer housing market trends, says Daniel John, chair of the Real Estate Board of Greater Vancouver (REBGV)..“With interest rates rising, home buyers are taking more time to make their decisions in today’s housing market,” says John. “Home buyers have been operating in a frenzied environment for much of the past two years.” .“This spring is providing a calmer environment, with fewer multiple offer situations, which is allowing buyers to explore their housing options, understand the changing mortgage market and do their due diligence.”.Sales in the GVA were down 31.6% from May 2021 and down 9.7% from April..New listings in May were down 10.5%, year-over-year, but up 4.4% from April. .The MLS Home Price Index composite benchmark price for all residential properties in the GVA is $1,261,1001, a 14.7% year-over-year increase and a .3% decrease from April. .“Upward pressure on home prices has begun to ease in the housing market over the last two months,” says John. .“Where home prices go next will depend on housing supply. While we’re beginning to see modest increases in home listings, we still need housing supply totals to more than double to bring the market close to balanced territory,” he says, echoing his counter-part in the GTA. .All in all, both markets are reacting to the Bank of Canada’ rate increases and from buyer fatigue..However, with average prices in the GTA and GVA still at astronomical levels, the bank is most likely to hike its rate again in July, by at least .25%..But upward price pressures will not be anywhere near being alleviated until both areas modify restrictions on new housing supplies.
