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There seems to be a lot of uncertainty around the Toronto market after the Ontario Government’s Fair Housing Plan announcement in April.  After observing trends ourselves, speaking with other agents, and reading market reports, here is our explanation of what is going on-
Because the market has been so strong this spring, after the announcement, many sellers decided to put their properties on the market with concerns that it may be the peak & wanting to capitalize on their investment.  The market has therefore had more supply and buyers are shopping longer.  When there were only half the amount of listings in January compared to January 2016, it was a different story and buyers were much more pressured to snatch up whatever they could.
The market is still good, the amount of supply is just slowing things down a bit with buyers having more selection.  Most of the cause of the increased supply was a reaction to the government announcement, and it will likely get bought up over the summer months and into the fall.
Interestingly, the Vancouver market is going the other direction after their policy change announcement in August caused their market to slow for several months.  Nine months later things are on their way up again.  There were 24% more Vancouver sales in May compared to April and the prices were up 2.8% from April (Real Estate Board of Greater Vancouver).
It’s hard to know exactly what is going to happen, as consumers’ behaviour creates their market conditions, but many people are viewing Vancouver’s experience as a benchmark for Toronto’s current situation.  Our feeling is that the current dip in the number of sales is likely a temporary pullback from buyers who are waiting to see how the new rules will affect the market.  The coming months will tell.

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