Five Years and Nothing Really Changes in the Toronto Market
I thought that you might like to look at an article I wrote 5 years ago about the consistency with respect to the Toronto real estate market.
I have frequently indicated that the market starts off in January, rises in February, rises in March, rises in April and then reaches a peak in May (May 1st, May 15th or May 31st), declines in June, declines further in July and continues to decline in August, when the downward trend bottoms out and the upward trend starts again in September, reaches a second peak in the year in October, and then starts to fall in November and falls again in December. Then, the cycle starts all over again the next year.
Please note that the May 1st number is actually April 30th.
Here are the numbers for 2017:
Here were some of the previous observations:
Applying our previous observations to 2017, everything seemed to unfold as it should notwithstanding that it was a very tumultuous year:
· The market peaks twice every year (true in 2017)
· The peaks are Spring and Fall (true in 2017)
· The Spring peak is also the calendar peak (true in 2017)
· The market usually peaks in May (true in 2017)
· The market dips in the Summer (true in 2017)
· The trough is usually August (true in 2017)
· The market peaks again in October (true in 2017)
What follows is a copy of the previously posted observations in November 2012:
"Key to the Toronto Real Estate Cycle “100 ~ 7 ~ 99”
The Combination for the Toronto Market
You might think that this is a good set of numbers for the Quarterback in a football game, but what about the Quarterback in a real estate transaction?
This may be all the market information that you really need to know. This is the “key” source to the real estate cycle. This is the “combination” to unlock the cycle.
We looked at the usual patterns of sales and prices in the Toronto and Greater Toronto real estate markets over the last 9 years.
· The market peaks twice every year (9 times out of 9)
· The peaks are Spring and Fall (9 times out of 9)
· The Spring peak is also the calendar peak (7 times out of 9)
· The market usually peaks in May (5 times out of 9)
· The market dips in the Summer (9 times out of 9)
· The trough is usually August (8 times out of 9)
· The market peaks again in October (8 times out of 9)
So, let’s assume the market starts off each year and rises to its peak in May. Let’s call that 100. That’s the high water mark or 100%. Then, the market dips down anywhere from 3.97% to 8.48%. The average is 6.95%, which we can round to 7%. Then, we have a resurgence to the end of October, anywhere from 92.45% to 104.85%. The average is 98.96%, or 99%.
Here’s the formula:
If you don’t like minus numbers, or lucky #7, then you could re-express the formula as 100-93-99. But, that would mean that you were “superstitious”.
What does all this mean?
Generally, the market is moving upwards at the annualized rate of 6.2%. Try to catch the cycle in the Spring. But, if you miss it, you may still get another chance. Don’t wait forever, because the market is going back up again. By October, 99% of the value has been recovered. This affirmation or reconfirmation of value simply sets the stage for another market increase, this time beginning in November. And, I know, you thought that nothing ever happened in November!
If you are the Quarterback, just remember:
100 ~ 7 ~ 99"
We will undertake some calculations to see how close the formula was in 2017.
The 2017 numbers are:
100 ~ 20 ~ 85
That was a volatile year!
Here’s the link:
Brian Madigan LL.B., Broker