Toronto Market Continues to Decline Over August 2018
The Toronto Real Estate Board (TREB) has just released its August statistics:
GTA REALTORS® Release August Stats TORONTO, ONTARIO, September 6, 2018 –
Toronto Real Estate Board President Garry Bhaura announced sales and price increases on a year-over-year basis in August. Greater Toronto Area REALTORS® reported 6,839 sales through TREB’s MLS® System in August 2018 – an 8.5 per cent increase compared to August 2017.
Both the average selling price, at $765,270, and the MLS® Home Price Index Composite Benchmark for August 2018 were up compared to the same month in 2017, by 4.7 per cent and 1.5 per cent respectively.
The average selling price increased by more than the MLS® HPI Composite due, at least in part, to a change in the mix of sales compared to last year. Detached home sales were up by double digits on a year-over-year percentage basis – substantially more than many other less-expensive home types.
“It is encouraging to see a continued resurgence in the demand for ownership housing. Many home buyers who had initially moved to the sidelines due to the Ontario Fair Housing Plan and new mortgage lending guidelines have renewed their search for a home and are getting deals done much more so than last year. In a region where the economy remains strong and the population continues to grow, ownership housing remains a solid long-term investment,”
said Mr. Bhaura.
Month-over-month sales and price growth also continued in August. On a preliminary seasonally adjusted basis, August 2018 sales were up by two per cent compared to July 2018. The seasonally adjusted August 2018 average selling price was down slightly by 0.2 per cent compared to July 2018, following strong monthly increases in May, June and July.
“Market conditions in the summer of 2018, including this past August, were tighter than what was experienced in the summer of 2017. In August, the annual rate of sales growth outpaced the annual rate of new listings growth. We only have slightly more than two-and-a-half months of inventory in the TREB market area as a whole and less than two months of inventory in the City of Toronto. This means that despite the fact the sales remain off the record highs from 2016 and 2017, many GTA neighbourhoods continue to suffer from a lack of inventory. This could present a problem if demand continues to accelerate over the next year, which is expected,”
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
$734,824 January 1st
$735,838 January 31st
The average price has risen from $734,824 at the beginning of the year to $808,056 in June and then dropped down to $765,270 by the end of August, that’s an increase of $30,446 which is a 4.14% increase in the eight month period. If that were to continue (which is entirely speculative), it would be 6.21% over a one year period. That’s the present annual growth rate on an annual basis.
Maybe we should go back to the beginning of 2017 and see what those numbers show?
The average price would have risen from $730,124 to $765,270, that’s an increase of $35,146 or 4.81% over the full 20 month period, or expressed annually as 2.88%. That’s important since if we were simply to calculate on a straight line basis, market performance for the last 20 months, we come up with 2.88%.
Naturally, the 2.88% completely removes the Spring of 2017, February, March, April and May from the equation. We are simply asking the question: “how has the market performed since the beginning of 2017”?
Here are the recent numbers: $804,842, $803,681, $807,871 over the April, May and June, basically holding steady, no serious ups or downs. But, then we had July at $782,215 followed by August at $765,270.
The year 2017 was unusual, it was a significant aberration from the normal trends.
Now, it looks like we are back to seeing the regular patterns.
The market increases in January, February, March and April, reaches a peak in May (1st,15th, 31st ), decreases June, July and August, increases in September and October and decreases again in November and December.
In June this year we witnessed the peak for the year. However, it now looks like the usual cycle is resuming.
We no longer have rapidly escalating prices. 2.88% is like bank interest.
If you are selling, it would make sense to take advantage of the Fall market, and if you are buying, then the current rate which normalizes the period starting with January 2017 looks very attractive.
Volume of Transactions
This is what happened in 2017:
53,780 total for eight months
92,273 all of 2017
113,040 all of 2016
101,213 all of 2015
92,782 all of 2014
What happened to all the Buyers? Will they come back to the market?
It is interesting to see that the segment of the market namely “detached homes” has increased substantially. That’s the start of a normal market. Condos are the last to increase in the cycle, and they have moved up significantly compared with detached. Buyers will buy what they can afford!
The real estate market is always interesting. If you would like to discuss the market generally, give me a call at 416-745-2300.
Brian Madigan LL.B., Broker