Toronto and GTA Running at 11.71% Annual Performance over Two Years
TREB has just release its November statistics:
GTA REALTORS® Release November Stats, December 5, 2017 –
Toronto Real Estate Board President Tim Syrianos announced that Greater Toronto Area REALTORS® reported 7,374 transactions through TREB’s MLS® System in November 2017. This result was up compared to October 2017, bucking the regular seasonal trend.
On a year-over-year basis, sales were down by 13.3 per cent compared to November 2016. New listings entered into TREB’s MLS® System in November 2017 amounted to 14,349 – up by 37.2 per cent compared to November 2016, when the supply of listings was very low from a historic perspective.
“We have seen an uptick in demand for ownership housing in the GTA this fall, over and above the regular seasonal trend. Similar to the Greater Vancouver experience, the impact of the Ontario Fair Housing Plan and particularly the foreign buyer tax may be starting to wane. On top of this, it is also possible that the upcoming changes to mortgage lending guidelines, which come into effect in January, have prompted some households to speed up their home buying decision,” said Mr. Syrianos.
The MLS® Home Price Index (HPI) composite benchmark price was up by 8.4 per cent on a year-over-year basis in November 2017. The average selling price for all home types combined was down by two per cent compared to November 2016, due in large part to a smaller share of detached home sales versus last year.
On a year-to-date basis, the average selling price was up by 13.4 per cent compared to the same period last year. High density home types continued to lead the way in terms of price growth, with the average condominium apartment price up by double-digits compared to November 2016.
“Changes in market conditions have not been uniform across market segments. In line with insights from consumer polling undertaken by Ipsos in the spring, we are still seeing seller’s market conditions for townhouses and condominium apartments in many neighbourhoods versus more balanced market conditions for detached and semi-detached houses. We will have more insights to share about consumer intentions for 2018 at the end of January when TREB releases its third annual Market Year in Review and Outlook report,” 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:
Over the calendar year 2016, the average price went from $622,121 to $730,124, that’s an increase of $108,003 or $17.36%. That was a lot. The usual increase had been in the range of 6%, 7% or 8% annually.
Kindly note that the January number here is January 31st, the $622,121 is actually December 31st 2015, which naturally is the commencement for 2016.
The current price is $761,757. That’s still reasonably close to the end of January number this year at $768,124, and very close to the November 2016 figure, which happened to be the highest in 2016 at $777,091.
Let’s start out at the beginning of 2016 and compare that to now. We went from $622,121 to $780,104, which was a $139636 increase or 22.45% over 23 months, or 0.0097% per month which is 11.71% annually. So, that’s still high, but it’s more reasonable. That’s the performance number from the start of 2016. That’s not bad at all.
In order to properly evaluate the performance we have to look at those two years together. There were very early gains and some of those gains have been given up in order to produce the more reasonable results.
The traditional sequence over several decades is that the market starts off in January, increases in February, increases in March, increases in April and reaches a peak on the 1st, 15th or 31st of May, it then declines in June, declines in July and declines again in August, then it reverses itself in September with an increase, followed by an increase in October where it reaches a second peak for the year on Halloween, followed by a decrease in November and another decrease in December. Then, the cycle starts over again.
Last year there was an aberration. The peak of the 2016 market was November. That was an indicator of “pent up demand”.
This height of the market this year was in April. That was due to the fact that prices “got out of hand”. Now, we are reaching a more normalized market period.
The decline in June, July and August was predictable, as was the increase in September. The October and November results were also quite predictable.
Let’s do another comparison. We’ll start at the beginning of 2017 and compare that to now. We went from $730,124 to $761,757 which was a $31,633 increase or 4.43.% over 11 months, or 0.0039% per month which is 4.72% annually. That’s a little on the shy side. That’s the performance number from the start of 2017.
You will notice, of course, that the escalation and retreat in the Spring are taken out of the equation.
Ordinarily, we might expect annual increases in real estate values to run in the 6% to 8% range. And, that’s exactly where we are. Everything is completely normal.
Spring Market Caution
The Spring market was different. There was excessive demand, and no inventory. If you listed and sold, and your Buyers indeed were able to close, then this worked out well for you. If you were a Buyer, you likely overpaid. In time, the market will solve this problem for you. If however, you failed to arrange your financing appropriately, then you might not have been able to close. This may have exposed you to the loss of your deposit and thousands in addition for other damages, costs, carrying charges and expenses of the Seller. The Seller has two years to sue, so you might not even know your potential liability for quite some time.
11.71% annually from beginning of 2016 (excellent)
4.72% annually from the beginning of 2017 (a little below average)
Brian Madigan LL.B., Broker