Market Recovers Substantially Looking at May 2018 Results
The Toronto Real Estate Board has just released its report on May:
June 4, 2018 – Greater Toronto Area REALTORS® reported 7,834 sales through TREB’s MLS® System in May 2018. This result was down by 22.2 per cent compared to May 2017. While the number of sales was down year-over-year, the annual rate of decline was less than reported in February, March and April, when sales were down by more than 30 per cent.
On a month-over-month basis, seasonally adjusted May sales were basically flat compared to April. Supply of homes available for sale continued to be an issue. New listings were down by 26.2 per cent. The fact that new listings were down by more than sales in comparison to last year means that competition increased between buyers. Recent polling conducted by Ipsos for TREB suggests that listing intentions are down markedly since the fall.
“Home ownership remains a sound long-term investment. Unfortunately, many home buyers are still finding it difficult find a home that meets their needs. In a recent Canadian Centre for Economic Analysis study undertaken for the Toronto Real Estate Board, it was found that many people are over-housed in Ontario, with over five million extra bedrooms. These people don’t list their homes for sale, because they feel there are no alternative housing types for them to move into. Policy makers need to focus more on the ‘missing middle’ – home types that bridge the gap between detached houses and condominium apartments,”
said Mr. Syrianos.
The MLS® Home Price Index (HPI) Composite Benchmark was down by 5.4 per cent year-over year. The average selling price for all home types combined was down by 6.6 per cent to $805,320. On a seasonally adjusted basis, the average selling price was up by 1.1 per cent compared to April 2018. “Market conditions are becoming tighter in the Greater Toronto Area and this will provide support for home prices as we move through the second half of 2018 and into 2019. There are emerging indicators pointing toward increased competition between buyers, which generally leads to stronger price growth. In the City of Toronto, for example, average selling prices were at or above average listing prices for all major home types in May,”
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
$735,149 January 1
$735,793 January 31
So, how’s the market?
From strictly a price standpoint, the average price has risen in 2018 from $735,149 on the 1st of January to $805,320 on the 31st of May. That’s an increase of $70,171 over 5 months, being a 9.54% increase or 1.91% per month.
It would be wrong to extrapolate that number over the year, because we know that the real estate prices are cyclical. May is often the height of the market for the full year. If prices hold firm until the end of December, then we will have 9.54% over the entire year. However, in most years, we actually see a slight drop.
Lots of people still want to talk about 2017. That was the height of the market. In April the average price reached $918,170. That means that we still have a considerable way to go before we will get back there.
Here’s the problem: owners saw the April numbers. They decided that that’s what their house was worth and they won’t sell for less. So, we have seen an erosion in the numbers of properties offered for sale. If an owner is to become a Seller, then, they will have to be happy with the price. Many owners right now, won’t budge. If they have a choice then they will simply stay put.
Longer term, we are looking at a rising market. This year we are already up 9.54%. That’s very positive. But, if you want to compare to last year, you will be disappointed.
The fact that the market escalated last year, reached a peak, declined and then “bounced back” illustrates that there was a floor to the values. From here on, it will continue to increase “over the longer term”.
Brian Madigan LL.B., Broker