Home sales in the country rose 4% in June over May, and Toronto led the charge with a whopping 17% increase.
According to the Canadian Real Estate Association, Toronto has been forecasted for some time to bounce back, and while it’s too early to celebrate ameliorated fortunes, the seed is sown.
“The May to June increase is the first bit of evidence that it might be happening, but having said that, one month is not a trend,” said Shaun Cathcart, a senior economist at CREA. “These policy changes put a lot of buyers on the sidelines for the first six months, and things are starting to rebound. It’s a strong signal, but certainly not sustained at one month.”
Extrapolating market reactions to policy changes over the last few years, Cathcart says previous rebound timelines make things look promising.
However, June sales are still a five-year low.
“It depends on what months and stat you look at, but seasonally adjusted sales, we’re still at one of the lowest levels in five years,” said Cathcart. “Part of the increase from May to June just reflects how quiet the market was in May.”
According to the Altus Group Housing Trend report, first-time buyers’ absence from the housing market explains why the market has been languid all year. The report predicts an autumn rebound.
In particular, first-time buyers have not abandoned dreams of homeownership. Rather, they’ve deferred them while they save up for larger down payments, which is what an expensive market like Toronto’s demands.
“With all the policy changes we’ve had and additional stress testing, they have knocked many first-time buyers out of the market for a while, but part of what they’re doing is saving money. They’ll be back,” said Patricia Arsenault, vice president of research and consulting services at Altus Group.
“Particularly among younger renters; they’re inclined to buy homes. Because of their ability at the moment, they’re saving longer and tapping resources from parents to help them out, but they’ll be back in the short-term. There’s nothing out there that says they don’t want to own homes anymore.”
Arsenault added that housing sales will markedly improve by the end of summer.
“People are saving for down payments,” she said. “Savings rates are up in Canada and that money is being used for better down payments.”
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