GTA October 2018 Market Stabilizes
This is the recently released report of the Toronto Rea Estate Board concerning the October 2018 results:
GTA REALTORS® Release October Stats Greater Toronto, November 5, 2018 –
Toronto Real Estate Board President Garry Bhaura announced year-over-year increases in home sales and average sale prices reported through TREB’s MLS® System in October 2018. Greater Toronto Area REALTORS® reported 7,492 sales through TREB’s MLS® System in October 2018 – a six per cent increase compared to October 2017.
On a preliminary seasonally adjusted basis, sales were down by one per cent compared to September 2018. The average sale price for October 2018 was up 3.5 per cent on a year-over-year basis to $807,340.
After preliminary seasonal adjustment, the average selling price was up one per cent compared to September 2018. The MLS® Home Price Index (HPI) Composite Benchmark was up by 2.6 per cent compared to October 2017.
Price growth continued to be driven be the condominium apartment and higher density low-rise market segments.
“Annual sales growth has been positive since the late spring. While the OSFI stress test and higher borrowing costs have kept sales below 2016’s record pace, many households in the Greater Toronto Area remain upbeat on home ownership as a quality long-term investment.
A strong regional economy and steady population growth will continue to support the demand for housing ownership as we move into 2019,”
said Mr. Bhaura.
There were 14,431 new Listings entered into TREB’s MLS® System in October 2018 – down 2.7 per cent compared to October 2017. The fact that sales were up and new listings were down year-over-year in October suggests that market conditions became tighter.
“Annual sales growth has outstripped annual growth in new listings for the last five months, underpinning the fact that listings supply remains an issue in the Greater Toronto Area. With municipal elections in the rear view mirror, all levels of government need to concentrate on policies that could remove impediments to a better-supplied housing market, including facilitating the development of a broader array of medium density housing choices,”
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 starting at the beginning of 2017 until now:
Average Prices Month
$730,124 January 1st
$768,351 January 31st
$734,824 January 1st
$735,838 January 31st
The average price has risen from $734,824 at the beginning of the year to $808,337 in June and then dropped down to $807,340 by the end of October, that’s an increase of $72,516 which is a 9.86% increase in the ten month period. If that were to continue (which is entirely speculative), it would be 11.84% over a one year period. That’s the present annual growth rate on an annual basis.
Let’s go back to the beginning of 2017 and see what those numbers show.
The average price would have risen from $730,124 to $807,340, that’s an increase of $77,216 or 10.58% over the full 22 month period, or expressed annually as 5.77%. That’s important since if we were simply to calculate on a straight line basis, market performance for the last 22 months, expressed as an annual percentage, we come up with 5.77%.
Naturally, the 5.77% completely removes the Spring of 2017, February, March, April and May from the equation. We are simply asking the question: “how has the market performed since the beginning of 2017”?
Here are the recent numbers: $804,944, $803,619, $808,337, and now $807,340 over the April, May, June and October basically holding steady, no serious ups or downs. As I had indicated earlier, I think we have basically found a new floor to the market.
Summer is just what we expected. This is what usually happens in the market each year:
The market increases in January, February, March and April, reaches a peak in May (1st,15th, 31st ), decreases June, July and August, increases in September and October and decreases again in November and December.
In June this year we witnessed the peak for the year. However, it now looks like the usual cycle is resuming. July and August were down and September and October we have seen an increases. We are at that the point which I had previously referred to as the floor.
As for prices, it would appear that we have some stability, however, I would expect to see slight decreases in November and December.
Volume of Transactions
This is what happened in 2017:
92,263 for the entire year
67,472 total for ten months
92,263 all of 2017
113,040 all of 2016
101,213 all of 2015
92,782 all of 2014
In the last two months of 2017, we had 12,204 transactions, if we added that to what we have now, that would bring us to 79,676 for the year, substantially short of what we have seen over the last few years.
What happened to all the Buyers? Will they come back to the market? They are still there! They just got caught offside. The market rapidly escalated and then dropped suddenly in 2017. Buyers who thought they could afford a detached home found that they couldn’t, so they withdrew. Interest rates increased slightly. Qualification requirements for mortgages tightened, meaning Buyers had less funds available to spend on properties.
However, the rental market is “tight”. There are competitive bidding wars now for rentals! After losing out, some renters will go back to purchasing on the theory that they might as well own something. And, it’s better to pay their own mortgage than their landlord’s.
The real estate market is always interesting. If you would like to discuss the market generally, give me a call at 416-745-2300.
Brian Madigan LL.B., Broker