Toronto and GTA Markets in September 2019
This is the recently released report of the Toronto Real Estate Board concerning the September 2019 results:
GTA REALTORS® Release September 2019 Stats TORONTO, October 3, 2019 –
Toronto Real Estate Board President Michael Collins announced that Greater Toronto Area REALTORS® reported 7,825 sales through TREB’s MLS® System in September 2019.
This result represented strong year-over-year sales growth of 22 per cent compared to 6,414 sales reported in September 2018. It is important to note, however, that sales remain well-below the record September 2016 peak of more than 9,800 sales.
On a preliminary seasonally adjusted basis, the September 2019 sales level remained in virtually the same as the August 2019 result. The supply of listings continued to be a concern in September 2019, with new listings down by 1.9 per cent year-over-year to 15,611.
We have experienced multiple months this year wherein the annual rate of sales growth outpaced the annual rate of new listings growth, resulting in the overall number of active listings at month-end being well-below last year’s levels.
This speaks to tightening market conditions and an accelerating annual rate of price growth. The annual rate of price growth in September reached the highest point so far in 2019.
The MLS® Home Price Index (HPI) Composite Benchmark was up by 5.2 per cent on a year-over-year basis in September. The average selling price for all home types combined was up by a similar annual rate of 5.8 per cent to $843,115. On a preliminary seasonally adjusted basis, the September 2019 average selling price was up by 1.2 per cent compared to August 2019.
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
$747,515 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. Changes are more likely for the most recent months.
The first observation is that the average price at $843,115 is the highest number this year. Traditionally, the high price point annual is achieved in 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 $843,115, that’s an increase of $108,278 which is 14.73% increase over the twenty one (21) month period. Expressed over 12 months, that’s an 8.42% 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 $843,115, that’s an increase of $112,643 which is 15.42% increase over the thirty three (32) month period. Expressed over 12 months, that’s a 5.61% 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 $$843,115, that’s an increase of $94,096 which is 12.56% increase over the nine month period. Expressed over 12 months, that’s a 16.75% annualized increase. Naturally, that presumes that the market will continue to rise at the same rate over the final three months of the year. Historically, November and December have been poor performers.
So, what’s the percentage rate of increase?
From 2017 5.61% calculated
From 2018 8.42% calculated
From 2019 16.75% estimated
What is we looked back to the end of August, what would the numbers have looked like then:
From 2017 3.19% calculated
From 2018 4.64% calculated
From 2019 8.73% estimated
What we are seeing is a very major and significant increase in just one month. Numbers don’t lie. They are just numbers. What’s important is how we interpret them. The most accurate number here is the 5.61 % 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 not new!
Volume of Sales
Month 2019 2018 Trend
January 3,969 3,987 down
February 4,983 5,148 down
March 7,135 7,188 down
April 9,007 7,742 up
May 9,955 8,402 up
June 8,836 8,024 up
July 8,581 6,916 up
August 7,711 6,797 up
September 7,825 6,414 up
Total 68,002 60,618 up
Last year the total sales for the first eight months was 60,618 and this year it’s 68,002, or 7,384 more transactions representing an 12.18% 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 put 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.
Semi-detached houses in the 416 rose the most in price over the month. We will see this trend continue into the 905 and then push up the prices of detached houses in both areas. That’s the next trend to watch for!
If you would like to discuss the market, please give me a call.
Brian Madigan LL.B., Broker