Toronto Housing Market Implodes: Prices Plunge Most On Record

Tyler Durden's picture

Until mid 2017, it appeared that nothing could stop the Toronto home price juggernaut:

And yet, In early May we wrote that "The Toronto Housing Market Is About To Collapse", when we showed the flood of new home listings that had hit the market the market, coupled with an extreme lack of affordability, which as we said "means homes will be unattainable to all but the oligarchs seeking safe-haven for their 'hard'-hidden gains, prices will have to adjust rather rapidly."

Exactly three months later we were proven right, because less than a year after Vancouver's housing market disintegrated - if only briefly after the province of British Columbia instituted a 15% foreign buyer tax spooking the hordes of Chinese bidders who promptly returned after a several month hiatus sending prices to new all time highs - just a few months later it's now Toronto's turn.

On Thursday, the Toronto Real Estate Board reported that July home prices in Canada’s largest city suffered their biggest monthly drop on record amid government efforts to cool the market and the near-collapse of Home Capital Group spooked speculators.

The benchmark Toronto property price, while higher 18% Y/Y, plunged 4.6% to C$773,000 ($613,000) from June. That was biggest monthly drop since records for the price index began in 2000, according to Bloomberg calculations, and brought prices down in the metro area to March levels.

More troubling than the price drop, however, was the sudden paralysis in the market as buyers and sellers violently disagreed about fair clearing prices and transactions tumbled 40.4% to 5,921, the biggest year-over-year decline since 2009, led by the detached market segment.

Separately, the average price, which includes all property types, rose 5% to C$746,218 from July 2016, less than a third of the 17% increase at this time last year.

Commenting on the sudden collapse of Toronto's real estate market, Toronto Real Estate Board President Tim Syrianos said that "a recent release from the Ontario government confirmed TREB’s own research which found that foreign buyers represented a small proportion of overall home buying activity in the GTA. Clearly, the year-over-year decline we experienced in July had more to do with psychology, with would-be home buyers on the sidelines waiting to see how market conditions evolve."

As Bloomberg notes, local government introduced housing regulations since October that have pushed out many potential buyers. The measures were seen as necessary to cool prices climbing at an unsustainable pace. Meanwhile, shares of Home Capital Group imploded in the spring after the alternative mortgage lender failed to disclose the extent of fraudulent mortgage activity, leading to a dramatic bank run which nearly left the company insolvent until a last minute bailout by Warren Buffett rescued the company, and - according to some - the Canadian housing sector.

As the top chart shows, Toronto prices were breaking records each month and deals were booming. In March, sales were up 18% and the average home price soared 33% from the prior year to C$916,567. That began to turn the following month when listings jumped 34 percent. Average prices started cooling in May, rising 15% and then up only 6% in June.

To slow down the housing bubble, in April the province of Ontario introduced sweeping rental regulations that included capping rent increases and introducing a foreign investor tax. The move came after the federal government in October put restrictions on insured mortgages, and the nation’s financial regulator also proposed restricting uninsured home loans this year.

So is this the end of Canada's housing bubble? Now that upward price momentum is broken, it will take a long time before the blistering price gains seen in recent months in Toronto resume. What is more concerning is if the downside - either in Toronto or elsewhere - accelerates. With the Bank of Canada finally rising rates after a 7 year hiatus, making mortgages more expensive and adding further downward pressure to home prices, the Toronto home price crash could not have come at a worse time for a country where the housing bubble is a key component to preserving the illionsary "stability" status quo.

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GUS100CORRINA's picture

Toronto Housing Market Implodes: Prices Plunge Most On Record

My response: This is what happens when the foreigners quit buying. Coming to CA any day now.

Shitonya Serfs's picture

Yes CA next. But then RE dries up in TX and CO following CA people not being able to sell and abandon ship.

froze25's picture

No big deal. I was just reading how Canada was bringing in Haitian "refugees", surely those highly intelligent, highly skilled people will start up high tech well paying businesses and be able to afford those expensive houses with all the prosperity they bring to the communities they move to. The only other group I can think of that is superior to them maybe the Somalis. Those guys can rub two sticks together and make a nuclear power plant. Its as if physics comes naturally to them. Now don't even get me started on all the inventions that modern society benefits from that they have gifted to the world. They clearly bring far more to the table then they take.

Shitonya Serfs's picture

They bring the AIDS and prehistoric mating rituals.

froze25's picture

Here is a video of them in action bettering society.  http://www.dailymail.co.uk/video/news/video-1511765/GRAPHIC-Man-brutally...

Where are all the Trolls and down votes? Oh the word "Trump" isn't in this article.

BaBaBouy's picture

Montreal is super cheap...

Watch MTL Next big China Boom ...

nope-1004's picture

Realtors will say "buy now, the dip won't last".

 

LOL

LOL

LOL

LOL

LOL

 

auricle's picture

I'm sure lower interest rates will fix it. /s

Handful of Dust's picture

That video of the black teens beating up the man on the Dallas DART reminds me of getting robbed at gunpoint by two blacks outside that Half Priced Bookstore on Northwest Highway by that DART station awhile back.

 

Cut the child tax credit to slow down shitling production would be a start.

 

 http://www.dailymail.co.uk/video/news/video-1511765/GRAPHIC-Man-brutally...

Son of Loki's picture

Dallas is a great example of Democrat-run, multiculutral paradise. Here's a Dallas local expressing himself:

 

 

Dallas Police ‘Ambush’: 12 Officers Shot, 5 Killed During BLM Protest

 

http://www.nbcnews.com/storyline/dallas-police-ambush/protests-spawn-cit...

Herodotus's picture

The Dallas police covered up the Kennedy assassination.  So perhaps they are just reaping a bit of what they sowed.

armada's picture

Kennedy was assassinated by the banking cabal because he wanted to end the Jewish Fed. https://goo.gl/2SIIh0

Déjà view's picture

Additional price reduction if house had not been evauluated for radon gas...happens to be a huge problem in Canada...

Manthong's picture

How about a new TV series...

"Flop That House"..... ????

Laowei Gweilo's picture

>>> "because less than a year after Vancouver's housing market disintegrated"

 

Ummm.... Vancouver prices are nearly flat MOM and still up YOY.


And volumes are almost back up to pre-tax levels.

jbwilson24's picture

measured how? average prices? frankennumbers issued by the VREB?

 

the toronto realtors admit to fudging data and listing properties in multiple jurisdictions so as to count sales multiple times. Without an honest, independent source of evidence, I wouldn't trust the realtors.

Bunga Bunga's picture

"house prices never go down"

"houses are always a great investment"

"it's a generational buying opportunity"

"they are not making any more land"

 

Martian Moon's picture

Chinese were majorly burned in the 90's boom in MTL, they are not returning

The Real Tony's picture

Dead wrong the Chinese only buy highest and try to sell even higher. This strategy produces the maximum amount of losses in the shortest period of time. They wouldn't touch any part of Montreal or Quebec with a ten foot pole ever and I mean ever. As you can see the Chinese are all destined to become penniless by becoming the bag holders for every possible investment stategy they dream up. Remember always sell to a stupid Chinaman when you get the chance.

Justin Case's picture

They went long houses. They ain't flippers like whitey.

toady's picture

Yeah, but those fuckers speak French.

Nobody wants that.

mrtoad's picture

Show me a video of somalis getting sanctioned and bombed by the US. and Haitians getting ripped off by the US please.

Kidbuck's picture

If they can't defend their fucking country then they don't have a country.

First law of political science. Applies everywhere and always.

timetraveler's picture

The prices there are Loonie, absolutely Loonie I say

asteroids's picture

Take a look at that graph again carefully. Reversion to the mean will be spectacular. You ain't seen nothing yet.

alangreedspank's picture

That's the most sarcasms stringed together I've read today. Good job!

froze25's picture

When you drink the cool refreshing water from the well make sure you thank the man that dug it.

zebra77a's picture

It's all good folks! Canadian money is now all plastic and so is their loans!

bluskyes's picture

Canada imports black people, and pays them to do nothing, while farmers rent black people, and have to pay most of the expenses themselves.

something is wrong with this picture. Perhaps 10 years of indentured servitude for "refugees"

opport.knocks's picture

It used to be that way when the Ukrainian diaspora came here in the 1920-30's they were required to work 5 years in the prairies before resetttling. Five Saskatchewan winters will make anyone grateful when it finally ends.

Green2Delta's picture

If I'm not mistaken Haiti has the highest percentage of rocket surgeons per capita on any nation on Earth. Within a decade I suspect Canada will have the healthiest rockets in the world. Lucky bastages. 

The Real Tony's picture

It also seems every Pakistani is a doctor or lawyer back home when they arrive in Toronto, Canada. In reality none of them even went to school back home in Pakistan.

economicmorphine's picture

1,200 refugees.  Montreal.  Obviously has a huge effect on the Toronto housing market.  Facts are tricky things.

Dead Canary's picture

CANADA? We are have been getting big price rises here in Seattle for a while.

The Real Tony's picture

That was the direct result of foreigners' tax in vancouver and to compound things the recent foreigners' tax in the entire Golden Horseshoe area of Toronto. Remember to buy up the houses on the corners closest the the elementary schools. The Chinese will pay a King's ransom for these. So own them before the Chinese do.

The Real Tony's picture

Wait until this September the new party in British Columbia are going to turn the Chinese into roadkill by expanding the foreigners' tax to the entire province and taxing all foreigners who do not file income tax in Canada. You should see a massive increase in Seattle prices towards the end of this year. Like I said before all you have to do is buy all the corner lots (lots with houses on them the bigger the better) closest (as close as possible) to the elementary schools and you'll get very, very wealthy. The knocking on doors and telling the onwers I'll buy your house is the best way to do it. These houses/lots will sell for a King's ransom next year in Seattle.

Sector Catalyst's picture

What do you mean the Somalis bring no value?  They open up "grocery stores" using liberal business grants and/or public funds and service the needs of the other Somali immigrants, while getting social assistance for their families of 8 that rival the support that Canadian families get by a long shot. :P

I met a social worker who mentioned that a family of 5 Syrians were getting $72,000 per year in assistance.  I see these "Syrian refugees" in Costco and malls drressed fairly affluently and buying big ticket items and grocery carts full of stuff. Fucking insane.  

Meanwhile, you have real Canadian citizens who are unemployed or underemployed struggling to make ends meet who have put themselves though school with the hopes of job prospects, all the while the Turdeau goverment is opening up the Canadian jobs to a global employment market and incentivizing Canadian companies to hire foreigners for a 1/3 the wages after government subsidies.

Welcome to Cuckanada -- a haven for the third world beggers to bolster the population numbers, increase tax revenues, and the liberal voting base.  What a fucking scenario.

jbwilson24's picture

Canadians are so cucked that they can't even protest the use of TFWs. There is no reason for TFWs, given the low employment stats for young Canadians. Yet, they do nothing to protest it. At least the Americans voted for Trump, as ineffectual as he is.

jonjon831983's picture

An acquaintance working with these refugees and homeless in general has seen what happens with the support is taken away. You can guess.

yogibear's picture

Housing prices in Toronto and other cities are over-priced by at least 50%.

what happened's picture

 

Who do you think are buying up the Mcmansions in Greenwich CT?

 

Justin Case's picture

The communists? Oh wait errr they are suppose to be equally poor people and have nothing of their own? Am I missing something? Is Capitalism the the old communism?

The central planners's picture

Since lehmans? If not everybody go back to work.