The typical real estate ‘spring rush’ is slow out of the gates this year. Home sales in Canada dropped 2.9 per cent from March to April, a five year low. This April compared to last, actual sales activity dipped 13.9 per cent. The Canadian Real Estate Association’s April report shows around 60 per cent of local housing markets with fewer sales this April over last.
PRICE DROP IN BARRIE
Home prices in Barrie and area have dropped by 8.4 per cent this April year-over-year. The Canadian Real Estate Association says it’s more of a reflection of last year’s rapid price gain than anything else. Looking back to March, there were 370 home sales in the Barrie district, which is exactly half of the sales recorded just a year earlier (which was an all time high for March). And specifically in just the city of Barrie, sales activity this past March fell 57.2 per cent on a year-over-year basis.
Fewer Homes on the Market
New listings took a hit as well, with the number of newly listed homes dropping 4.8% in April – 12 per cent below the 10-year monthly moving average.
The sales activity drop doesn’t come as much of a surprise to CREA President Barb Sukkau who points to the new stress test that came into effect this year (for home-buyers with more than a 20 per cent down payment). Sukkau also says rapid price gains from a year ago have contributed to deteriorating year-over-year price comparisons.
CREA’s Chief Economist Gregory Klump said in a statement, “this is exactly the type of collateral damage that CREA warned the government about. As provinces whose economic prospects have faced difficulties because they are closely tied to those of natural resources, it is puzzling that the government would describe the effect of its new policy as intended consequences.”
Housing Supply and Demand
Another report released Tuesday says a lack of supply of new homes is linked to restrictions placed on builders. According to the C.D Howe Institute “home-buyers in the eight most restrictive cities in Canada paid an extra $229,000 per new house between 2007 and 2016 due to housing restrictions.” That number skyrockets to $600,000 in Vancouver. Closer to home, home-buyers are spending an extra $125,000 in York Region. C.D Howe researchers suggest easing restrictions on developing agricultural land, updating zoning bylaws, and reducing development charges.
That doesn’t sit well with those looking to protect the greenbelt from development. The group Environmental Defence says reducing development charges is flawed. They claim those costs will just get passed onto taxpayers and in fact, there’s absolutely no need to open up more agriculture lands for development. They point out that there’s land already designated in the Greater Golden Horseshoe to fulfill Ontario’s housing needs until 2031 and beyond.
CREA economists use the number of months of inventory (how long it would take to liquidate current inventories at the current rate of sales activity) to measure balances within housing supply and demand. There were 5.6 months of inventory on a national basis at the end of April 2018, the highest level since September 2015.