This is a stunning collapse in sales and deals a brutal blow to expectations that the market would take off after the repeal of the HST. Says Shuchat:
It is now April 17! So far, I don't see the hoped for impact of the HST elimination. I am hoping that this is a data reporting issue, although I don't imagine the data being that far behind.
Here is the statistical information on the units that sold:
- The average selling price per square foot was: $467.63.
- Property #1 (Garden City) entered the market in July 2012 priced at $2,188,000 and sold for $1,588,785
- Property #2 (Garden City) entered the market in September of 2012 priced at $2,180,000 and sold for $1,760,000.
- Property #3 (Granville) entered the market on January of 2013 priced at $2,188,000 and sold for $1,830,000.
For arguments sake, and all this would change when examining a particular property in detail, given that the average listing price across the board on these 196 homes is: $2,060,416 and the average sale price per square foot is $467.63, sellers must start to discount their new homes by at least 15% more to move them if they are of average build quality in an average site location. And, that assumes that they don't all do it at once, in order to get them to move.Why?Because the current asking price per square foot is at $556. Something has to give barring no change in demand, and I'm saying on average, that it will be about $300,000, depending upon how fast builders get their numbers there. It could be more!One more thing: Of the 196 houses on the table listed for sale (the new stuff), 96 or 49% of them are vacant!
It's a scenario that will only exacerbate itself as those who had been holding off listing while waiting for the HST to be removed, now begin to enter the market.
Builders will be battling the burgeoning inventory. Those who cut first - and deepest - will probably sell. The rest will merely join the herd chasing the market down.
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