Toronto’s Real Estate Market – Always Interesting (Mid July 2015)
The Toronto Real Estate Board just released its mid-month statistics for July. TREB reports weekly, bi-monthly and monthly. Generally, it is the monthly reports which are most notable. However, you will appreciate that the first indicator will be the weekly numbers. They can always be an aberration, so if they are confirmed by a movement in one direction or the other, the second week, that will be a prime indicator of a trend.
If you are close to the market, that is, buying or selling in the next 90 days, then these are some of the numbers that you want to watch.
Here’s the report:
Mid-Month Statistics July 16, 2015
Toronto Real Estate Board President Mark McLean announced that 4,332 sales were reported through TREB’s MLS® system by Greater Toronto Area REALTORS® during the first 14 days of July, 2015.
This sales figure was up by 11.9 per cent compared to 3,871 transactions reported during the same timeframe in 2014. Over the same period, new listings were down by 5.4 per cent to 6,831.
“There are many reasons why demand for ownership housing remains strong in the GTA. The fact that we benefit from steady population growth and a strong regional economy, compared to many other parts of Canada, is clearly important.
On top of this, of course, home buyers continue to benefit from historic or near-historic lows in terms of borrowing costs, which is key from an affordability perspective,” said Mr. McLean.
The average selling price for July 2015 mid-month transactions was $610,724 – up by 11.5 per cent compared to the average price of $547,777 for sales reported in the first 14 days July 2014.
Year-over-year price growth was reported for all major market segments. “The persistent lack of listings in many segments of the GTA housing market has been a key story this year. We have seen strong demand from all buyer groups – from first-time buyers through to those seeking to purchase a luxury home.
The problem is that many of these would-be home buyers have not been able to strike a deal on a home that meets their needs. The lack of supply has led to increased competition between buyers and strong upward pressure on home prices,” said Jason Mercer, TREB’s Director of Market Analysis.
You are aware of the fact that TREB compares the current statistics to a year ago, rather than last month. Inherently, that presents a problem from the perspective of analysis. It clouds the rise and fall of prices throughout the year.
If you follow the trends month to month, then you will be observing the market a little more closely.
Let’s have a quick look at the major industry benchmark, namely, the average sale price of the single family detached house in the City of Toronto:
March 15 $1,099,239
March 30 $1,042,405
April 30 $1,056,114
May 30 $1,115,120
June 30 $1,051,912
July 15 $ 999,518
First of all, you will notice that the price has dropped about $100,000. That probably just means the market peaked on 15 March 2015 this year (at least, so far).
The only reason we know this, is that we tracked the numbers after the fact.
You should also be aware that we are not comparing apples to apples here. All common shares of the Royal Bank of Canada are absolutely identical in all respects to every other common share. In the stock market, comparing prices is fair.
In real estate, we are just looking at averages, and those averages can be distorted at times in terms of their value for comparative purposes. It’s not like the same exact house gets sold over and over each month. These are all different houses.
Sometimes, one group of houses is just a little better than the group from another month. Assuming the second month is “up”, those particular houses, brought to market might just be a little better (on average). If the second month is “down”, it might just mean that those particular houses, brought to market might just be a little worse (on average).
These fluctuations can result from a comparison between the two groups of houses. It can take place without the market moving either up or down. The average price can trend up or trend down, while the market values can remain steady.
So, this would suggest that there is some additional value to the “year over year” approach, which smooths out the ups and the downs.
Another issue to consider is the revitalization of the housing stock. Just because somebody else:
1) Substantially renovated, or
2) Torn down and rebuilt,
in your immediate area, doesn’t necessarily mean your house has gone up in value.
On average, other houses in your area, have increased in value. Your particular house could have increased, decreased, or stayed the same.
There are all kinds of factors which affect real estate values from the economy to interest rates, to the type of property to the type of neighbourhood, and more…
If you would like to discuss some of these factors, please call me at 416-745-2300.
Brian Madigan LL.B., Broker