Toronto's crazy-insane property prices stayed high even through the 2008 crash and its aftermath, but sales volumes of houses of all types plummeted by 40.4% for July 2017-vs-July 2016, new listings are up by 5% over the same period -- and the average selling price has fallen by 19% since April.
April is when the Ontario government put in a few modest measures to identify and tax offshore property speculators, whose money had helped drive annual price-gains of up to 30%, making the city largely unaffordable even to working people with good jobs.
Meanwhile, there is a ton of new housing in the pipeline in the form of half-built condos (and condos that haven't even broken ground) that has been pre-sold, much of it to speculators intending to flip the properties long before they're built.
Houses are being pulled from the market and re-listed at lower prices, and second/third mortgage rates are crazy-high, up to 10% in some cases, endangering the portfolios of heavy speculators, whose defaults would send the amount of listings up by huge volumes, as these are people who have multiple homes that they'd lose all once.
Torontonians, like Londoners, are convinced that their housing prices will never decline, writing off the current tremors as local phenomena that only affects the outer suburbs and not the molten-hot downtown core. But, like London, Toronto has experienced devastating real-estate crashes in living memory, under conditions that were far less volatile (less global, less leveraged, less unequal) than the current moment.
Home prices had surged through April. The market was going nuts, with year-over-year price increases of over 30%! In April, the average selling price in the Greater Toronto Area (GTA) soared to C$920,761. But that home-price peak in April is now a distant memory.
April 20 was the day the government of the Province of Ontario announced its “Fair Housing Plan” – a laundry list of measures, including a 15% levy on foreign speculators – to prick the house price bubble in Greater Toronto and surrounding areas. The Bank of Canada has been warning home buyers about risks and losses too.
After which all heck has broken lose. By July, in just three months, the average selling price plunged 19% to C$746,218.
Toronto Housing Bubble Pops. “Genuine Fear” of Price Collapse
[Wolf Richter/Wolf Street]
(via Naked Capitalism)