Toronto Market Demonstrates Steady Progress in March 2018
The Toronto Real Estate Board has just released its March statistics. Let’s have a look:
GTA REALTORS® Release March Stats, TORONTO, ONTARIO, April 4, 2018
Toronto Real Estate Board President Tim Syrianos announced that Greater Toronto Area REALTORS® reported 7,228 residential transactions through TREB’s MLS® System in March 2018. This result was down by 39.5 per cent compared to a record 11,954 sales reported in March 2017 and down 17.6 per cent relative to average March sales for the previous 10 years.
The number of new listings entered into TREB’s MLS® System totaled 14,866 – a 12.4 per cent decrease compared to March 2017 and a three per cent decrease compared to the average for the previous 10 years.
“TREB stated in its recent Market Outlook report that Q1 sales would be down from the record pace set in Q1 2017,”
said Mr. Syrianos.
“The effects of the Fair Housing Plan, the new OSFI mandated stress test and generally higher borrowing costs have prompted some buyers to put their purchasing decision on hold. Home sales are expected to be up relative to 2017 in the second half of this year.”
The MLS Home Price Index Composite Benchmark was down by 1.5 percent on a year-over-year basis for the TREB market area as a whole. The overall average selling price was down by 14.3 per cent compared to March 2017.
While the change in market conditions certainly played a role, the dip in the average selling price was also compositional in nature. Detached home sales, which generally represent the highest price points in a given area, declined much more than other home types.
In addition, the share of high-end detached homes selling for over $2 million in March 2018 was half of what was reported in March 2017, further impacting the average selling price.
“Right now, when we are comparing home prices, we are comparing two starkly different periods of time: last year, when we had less than a month of inventory versus this year with inventory levels ranging between two and three months. It makes sense that we haven’t seen prices climb back to last year’s peak. However, in the second half of the year, expect to see the annual rate of price growth improve compared to Q1, as sales increase relative to the below-average level of listings,”
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
$734,948 January 1st
$735,557 January 31st
This means that since the beginning of the year the average price has increased from $734,948 on January 1st to $784,558 on March 31st , that’s a 6.75% in three months. That’s significant.
We have solid increases in the calendar year, month after month.
Naturally, it will always be disappointing if you choose to compare the numbers to the height of the market in 2017. If you choose to do so, you will be somewhat upset for months to come.
However, if you just look at this calendar year alone, we have solid performance which is currently at the annualized rate of 27%. You will appreciate that will not happen over the entire calendar year.
Now that the market has normalized, what would we reasonably expect to see?
I would expect that the market will increase in April and increase once again in May. The height of the market will be reached on May 1st, May 15th or May31st. The market will decline somewhat in June, again in July and further decline in August. Then, the market will increase once again in September and reach a second peak for the year on October 31st. This second peak will come within 3% of the May number. After that, we should see the market decline in November and once again in December. That’s the pattern which I would expect to see.
At the moment the market is performing well and I would expect that to continue. Last year at this time, we had a Sellers’ market and this year, it’s a balanced market. There has been an overall “market lift” in pricing. Buyers who thought they could afford a detached house, now realize they can afford a semi-detached and so on.
Affordability is also affected by the new mortgage qualifying rules. About 25% of a Buyer’s purchasing power was taken away.
All of those factors have been priced into the market and I expect a balanced market for the remainder of the calendar year.
Brian Madigan LL.B., Broker