Toronto and GTA Markets in October 2019
This is the recently released report of the Toronto Real Estate Board concerning the October 2019 results:
GTA REALTORS® Release October 2019 Stats TORONTO, November 5, 2019 –
Toronto Real Estate Board President Michael Collins announced that Greater Toronto Area REALTORS® reported 8,491 residential sales through TREB’s MLS® System in October 2019.
This result represented a 14 per cent increase compared to 7,448 sales reported in October 2018. GTA-wide, sales were up on a year-over-year basis for all major home types.
“A strong regional economy obviously fuels population growth. All of these new households need a place to live and many have the goal of purchasing a home. The problem is that the supply of available listings is actually dropping, resulting in tighter market conditions and accelerating price growth,”
said Mr. Collins.
The trend of annual growth in sales versus annual decline in new listings continued in October 2019, with new listings down by 9.6 per cent compared to October 2018. The resulting tighter market conditions compared to a year ago resulted in positive annual rates of price growth across all major market segments, from a GTA-wide perspective.
The MLS® Home Price Index Composite Benchmark was up by 5.8 per cent on a year-over-year basis in October 2019 – the strongest annual rate of growth since December 2017. The average selling price for all home types combined was up by 5.5 per cent to $852,142, compared to $807,538 in October 2018.
“As market conditions in the GTA have steadily tightened throughout 2019, we have seen an acceleration in the annual rate of price growth. While the current pace of price growth remains moderate, we will likely see stronger price growth moving forward if sales growth continues to outpace listings growth, leading to more competition between home buyers,”
said Jason Mercer, TREB’s Chief Market Analyst
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 2018 until now:
Average Prices Month
$734,837 January 1st
$735,874 January 31st
$749,019 January 1st
$747,175 January 31st
For those following these numbers on a monthly basis, please note that some of the recent sales numbers in 2019 have had to be restated. A few transactions may have fallen through and not closed as originally scheduled. Consequently, TREB deletes them and re-enters them in the proper month. That will throw the average prices off by a few hundred dollars if you are looking back at previous monthly reports. Changes are more likely for the most recent months.
The first observation is that the average price at $852,142 is the highest number this year. Traditionally, the high price point annual is achieved in May. September also exceeded May. This is somewhat of a demonstration of “pent-up” demand.
Let’s do a quick analysis. 2018 started with $734,837 and we are now at $852,142, that’s an increase of $117,305 which is 15.96% increase over the twenty two (22) month period. Expressed over 12 months, that’s an 8.70% annualized increase.
Let’s also go back to 2017 which was the year with the peak of the market and the sudden drop. 2017 started with $730,472 and we are now at $852,142, that’s an increase of $117,670 which is 16.66% increase over the thirty four (34) month period. Expressed over 12 months, that’s a 5.88% annualized increase.
Why don’t we try the short term numbers for just 2019? The calendar year 2019 started with $749,019 and we are now at $$852,142, that’s an increase of $103,123 which is 13.77% increase over the ten month period. Expressed over 12 months, that’s a 16.52% annualized increase. Naturally, that presumes that the market will continue to rise at the same rate over the final two months of the year. Historically, November and December have been poor performers. However, in 2016, November was the highest month in the year.
So, what’s the percentage rate of increase?
From 2017 5.88% calculated
From 2018 8.70% calculated
From 2019 16.52% estimated
The most accurate number here is the 5.88 % annual increase from the beginning of 2017. It’s the longest time period, and is therefore the most steady and accurate. Historically, over one thousand years of history we have seen increases of over 5% per annum. So, this is certainly not new!
The market peaked in the early Spring of 2017, so this figure takes into account both the rise and fall in 2017. This is the market performance since the beginning of 2017.
The numbers to avoid are the very short term numbers. So, that would be what’s happening right now in 2019. They do look strong, and if we add another two months and take away some of the overall price increase we will still have a very strong year.
Volume of Sales
Month 2019 2018 Trend
January 3,968 3,987 down
February 4,982 5,148 down
March 7,133 7,188 down
April 9,006 7,742 up
May 9,953 8,402 up
June 8,826 8,024 up
July 8,561 6,916 up
August 7,687 6,797 up
September 7,806 6,414 up
October 8,491 7,448 up
Total 76,413 68,066 up
Last year the total sales for the first ten months was 68,066 and this year it’s 76,413, or 8,347 more transactions representing an 12.26% increase.
This trend will put the pressure on prices. Buyers have obviously chosen to enter the market rather than continue to sit on the sidelines.
More transactions without a corresponding increase in Listings will continue to place an upward pressure on prices.
This looks like an attractive and balanced market for both Buyers and Sellers. Lightening up on the stress test (mortgage qualifications rules) and extending amortization periods will permit Buyers to get more house for the money they spend.
If you would like to discuss the market, please give me a call.
Brian Madigan LL.B., Broker