February 2018 – Good News for GTA Real Estate
With all of the doom and gloom you have seen published in the press, I thought that you might like to have a closer look at the numbers and see what they reveal.
Here’s the February Report from TREB:
GTA REALTORS® Release February Stats TORONTO, ONTARIO, March 6, 2018 –
Toronto Real Estate Board President Tim Syrianos announced that Greater Toronto Area REALTORS® reported 5,175 residential transactions through TREB’s MLS® System in February 2018.
This result was down 34.9 percent compared to the record 7,955 sales reported in February 2017. The number of new listings entered into TREB’s MLS® System totaled 10,520, a 7.3 per cent increase compared to the 9,801 new listings entered in February 2017.
However, the level of new listings remained below the average for the month of February for the previous 10 years.
“When TREB released its Outlook for 2018, the forecast anticipated a slow start to the year compared to the historically high sales count reported in the winter and early spring of 2017.
Prospective home buyers are still coming to terms with the psychological impact of the Fair Housing Plan, and some have also had to reevaluate their plans due to the new OFSI-mandated mortgage stress test guidelines and generally higher borrowing costs,”
said Mr. Syrianos.
The MLS® Home Price Index Composite Benchmark was up by 3.2 per cent on a year-over-year basis for the TREB market area as a whole. This growth was driven by the apartment and townhouse market segments, with annual benchmark price increases of 18.8 per cent and 7.5 per cent respectively.
Single-family detached and attached benchmark prices were down slightly compared to February 2017. The overall average selling price for February sales was down 12.4% year-over-year to $767,818. However, putting aside the price spike reported in the first quarter of 2017, it is important to note that February’s average price remained 12 per cent higher than the average reported for February 2016, which represents an annualized increase well above the rate of inflation for the past two years.
“As we move further into the spring and summer months, growth in sales and selling prices is expected to pick up relative to last year. Expect stronger price growth to continue in the comparatively more affordable townhouse and condominium apartment segments. This being said, listings supply will likely remain below average in many neighbourhoods in the GTA, which, over the long-term, could further hamper affordability,”
said Jason Mercer, TREB’s Director of Market Analysis
Here are the average sale prices as reported by TREB for single family homes of all types in the GTA, including houses, townhouses and apartments:
Average Prices Month
$730,124 January 1st
$768,351 January 31st
The average prices are all taken at the end of the months that are noted. So, if you are looking for the starting price for purposes of calculation in 2018, that would actually be the same as the closing price on 31 December 2017.
The December 31st 2016 price was $730,124. That‘s the 1 January 2017 number. You can see how the market took off abruptly in January, February, and March, peaking for the year at $918,170 in April.
The Increases in 2017
$38,227 in the month of January
$108,012 in the month of February
$38,763 in the month of March
$3,044 in the month of April
The Increases in 2018
$609 in the month of January
$32,261 in the month of February
What Month Do We Choose for Comparison?
Let’s go year over year! That would be February 2017 at $876,363 to February 2018 at $767,818. That would be a drop of $108,545 or 12.39%. Interesting, doesn’t that “108” number look familiar?
Let’s try the height of the market to now. That would be April 2017 at $918,170 to February 2018 at $767,818. That would be a drop of $150,352 or 16.38% from the peak. That’s even worse.
Let’s go back to the beginning of 2017. We start at $730,124 and end up 14 months later at $767,818. We actually have an increase of $37,694 or 5.16% over 14 months, which is an annualized increase of 4.43%. That’s a little on the low side. The benchmark is 5% for real estate generally and a couple of points higher in the sought after higher demand areas like the GTA.
Let’s go back to 2016. Then, we start at $622,121 and after 26 months we are at $767,818. That’s an increase of $145,697 (23.42%) over 26 months. That’s 10.81% annually, which is a very attractive return.
Let’s just do one month. That would be $735,557 to $767,818. That’s 0.0438% in one month or 5.26% on an annualized basis.
So, you choose? What month do you want to compare.
Looking for Headlines?
- GTA Market drops 23.42% from Peak
- GTA Market Returns 10.61% since 2015
GTA Market Increases at 5.26% in February
All of those headlines would be technically correct and supported by the statistics. The selection of which headline to use is likely to indicate the bias of the reporter.
My preference is to use all of the statistics and interpret them in a longer term context.
Have a look at the current price of $767,818. Have you seen that before? See $768,351 on January 31st, $761,397 in November. Essentially, we have a flat market price. It ends up as the base amount, it’s the market floor. That’s what the current numbers are telling us right now.
This factors in, inflation, changes in legislation, increases in interest rates and both economic and political news. The Toronto and GTA real estate market have established a market floor and the trend will be upwards going forward.
The longer term baseline trend is 5%, but we should reasonably expect to see 6%, to 8%.
Brian Madigan LL.B., Broker