As stated in my post dated November 11th and titled "Area Real Estate Sales Continue to Remain Soft in 2018" I pushed the notion that paying attention to statistical data is a key element in helping our valued real estate clients make informed decisions. As November draws to a close and the monthly results are known, I suspect we will have some better insight into what the next couple of years will bring, in the meantime let's take one final look at what has happened in the first 10 months of 2018.
Year-to-date MLS unit sales are running 19% behind 2017 and this decrease is equally shared in both the single family home and condominium segments of the market. Through the end of October we have seen 1,256 single family home sales, a decrease of 18.6% from last year. Condominium sales year-to-date for the first 10 months of 2018 total 375 units and similarly to home there too are down 18.8%.
Meanwhile, vacant land sales are down over 65% this year with 100 units sold compared to 293 sales in the first 10 months of 2017. While the overall inventory of properties available to purchase remains below last year, nowhere is this more evident than with vacant lots. The glut of lots for sale from a couple of years ago are gone and no newly created lots/subdivisions have come on stream to replenish those lots that have sold and now have homes under construction.
The obvious question after reviewing the softer MLS sales data for many real estate market across Canada is, what is the cause and how will this downturn in real estate sales impact us moving forward in 2019, 2020 and beyond?
First, we all need to acknowledge that Canada's real estate market is somewhat unique to other parts of the globe. Given the market strength that Canadian real estate has demonstrated for many years, we are viewed by many countries as having a fascination with real estate and or home ownership regardless of the cost or overall economic climate. In most markets across the country, real estate values have tripled between 2000 to 2017 far out pacing the increase in annual incomes during the same period. Yes our market did slow down after the collapse of the U.S. real estate market through 2007 to 2009 but not nearly to the extent of our neighbours to the south. Real estate activity in Ontario started to rebound strongly in early 2010 the year in which the province implemented the harmonized sales tax (HST). Many in the province had the impression that home purchases under the new HST tax structure were going to be HST taxable and they rushed to buy. In some circumstances HST can apply to the purchase of a new home and in even a resale but that is more of an exception than the rule.
There is no question that low interest mortgages in recent years have helped to fuel the housing craze we have experienced. Multiple offers, with properties often selling for over their highly inflated list prices became the norm. Low interest mortgage have allowed buyers to spend more on a home they perhaps intended. Sooner or later that craze had to end, interest rates would rise as they have and other economic drivers would come into play all of which would impact the real estate market and other segments of the economy. This week's announcement by General Motors Canada is a good example. Some couples with both the husband and wife working may now be faced with raising a family and paying down debt as a one versus two income family and it's not just the auto industry that will create this, the oil and gas industry currently faces its own set of problems. While situations such as this is not a pleasant scenarios it is reality and it will no doubt have an impact on real estate and other aspects of our economy in the months or years ahead.
Only time will tell, November's market statistics will be out shortly. Stay tuned and follow my blog for ongoing market reports and other information that I will post to help you make information decisions about you specific real estate needs and or goals. For details on the luxury home and condominium market in our area see my Carriage Trade Homes blog.