Toronto Market Peaks out in the Middle of March 2015
Quite possibly we are beginning to see some breaks in the Toronto market. Here’s the report just released by the Toronto Real Estate Board:
Sales and Price Up Year-Over-Year in March 2015
TORONTO, April 7, 2015 –
Toronto Real Estate Board President Paul Etherington announced that Greater Toronto Area REALTORS® reported 8,940 sales in March 2015. This result represented an 11 per cent increase compared to March 2014. Sales were up for most major home types, both in the City of Toronto and the surrounding regions. New listings were also up, but by a lesser 5.5 per cent, indicating tighter market conditions.
“Home sales increased compared to last year as the cost of home ownership remained affordable, with lower interest rates going a long way to mitigate the effect of rising home prices. However, a substantial amount of pent-up demand remains in place, especially as it relates to low-rise market segments. This suggests that strong competition between buyers, which has fuelled strong price growth so far this year, will continue to be experienced throughout the spring,” said Mr. Etherington.
In March, the average selling price for all reported transactions was $613,933 – up 10 per cent year-over-year. The MLS® HPI Composite Index, which tracks benchmark homes with the same attributes from one period to the next, was up by 7.9 per cent. Average price growth was strongest for detached homes in the City of Toronto, at 15.9 per cent. Over the same period the detached MLS® HPI in the '416' area code increased 7.8 per cent.
The MLS® HPI provides a clear indication of price growth due to market forces - the relationship between demand and supply. Comparing MLS® HPI growth to average price growth provides a sense of the changing mix of home types sold from one period to the next.
"It is clear that seller's market conditions in many parts of the GTA are driving price growth. However, looking at the detached market segment in the City of Toronto in particular, growth in the average selling price outstripped growth in the MLS® HPI. This points to the fact that the mix of detached homes sold this year compared to last has shifted towards more expensive properties," said Jason Mercer, TREB's Director of Market Analysis.
Here are the month end numbers for single family homes in the GTA for 2014 and 2015:
When we are looking at the numbers it is important to appreciate that they are not always going up. The numbers tip over in some months.
The general real estate calendar would suggest the following: the market starts off in January, rises in February, rises in March and rises in April. In May it reaches its peak on the 1st, the 15th or the 31st. Then, the numbers will start to decline in June, again in July and once again in August. By September, they will have resumed an upward trend. On October 31st, they will peak again for the second time in the year. In November, they will start to fall and they will fall again in December. At this point, we are ready to start the entire cycle once again.
You will find that trend in 2014 and it looks like 2015 will be the same.
However, are there signs that something untoward is happening in the market?
The darling piece of real estate in the very hot GTA real estate market has been the single detached home in the 416, or Toronto proper.
Here is an interesting fact. In the first two weeks of March, TREB reported 497 sales with an average price of $1,099,239. This was 21.3% higher than the previous year!
For the entire month, there were 1,050 sales at an average price of $1,042,405 at a 15.9% increase over the previous year.
This might be an indicator that the prices have somewhat reached their saturation point. But, naturally, it’s too soon to tell. We’ll have to see more numbers to figure out what is happening and probably by then, it will be too late!
Brian Madigan LL.B., Broker