Strong October Numbers: Both Sales and Prices (2016)
The Toronto Real Estate Board (TREB) has just released its October 2016 market report. It is noteworthy that TREB right in the headline now refers to its report as “year-over-year”. Previously, this was not well-understood. This is the report:
October Home Sales Up Year-Over-Year TORONTO, November 3, 2016 –
Toronto Real Estate Board President Larry Cerqua announced that Greater Toronto Area REALTORS® reported a record 9,768 sales through TREB's MLS® System in October 2016 – up by 11.5 per cent compared to October 2015.
For the TREB market area as a whole, the largest annual rate of sales growth was in the condominium apartment market segment.
Detached home sales were up by 10 per cent year-over-year, driven predominantly by transactions in the regions surrounding Toronto.
“The record pace of GTA home sales continued in October, with strong growth observed throughout the month.
As we move through November and December, we will be watching the sales and listings trends closely, in light of the recent policy changes announced by the Federal Minister of Finance.
TREB will once again be conducting consumer survey work, in order to report on home buying intentions for 2017,” said Mr. Cerqua.
The MLS® Home Price Index Composite Benchmark was up by 19.7 per cent on a year-over-year basis in October 2016. Similarly, the average selling price for all home types combined was $762,975 – up 21.1 per cent over the same time period.
Double-digit increases were experienced for all major home types for the TREB Market Area as a whole.
“New listings were up slightly in October compared to last year, but not nearly enough to offset the strong sales growth. This meant that seller’s market conditions continued to prevail as buyers of all home types experienced intense competition in the marketplace.
Until we experience sustained relief in the supply of listings, the potential for strong annual rates of price growth will persist, especially in the low-rise market segments,” said Jason Mercer, TREB’s Director of Market Analysis.
Here are the average sales prices for single family homes in the GTA. This includes all types, detached, semis, townhouses, and condominium apartments:
July $710,538 ($710,554 previously)
August $710,895 ($710,464 previously)
September $756,080 ($755,755 previously)
The usual pattern is as follows: the market starts off in January, increases in February, increases in March, increases in April, reaches a peak in May (the 1st, 15th or 31st), declines in June, declines in July, declines in August, resumes an upward trend in September, peaks for the second time in October (31st), declines in November and declines once again in December. Then, the cycle starts all over again in the New Year.
You will see several items of interest here. The Spring peak was in May. The September number not only caught up, but exceeded the May peak. That was one month early. We have reached new highs in October, not only for the year but “all-time”.
The numbers for previous months can all be restated. That’s frequent with the month which just passed. The reason is that some deals fell through and then they appear in a subsequent month once sold to a second buyer. The restatements are not significant but it does help to explain why nothing ever works out exactly, with the math.
The October mid-month average price was $748,984. So, that was down from September and there was a sudden rush in the last part of the month.
It is important to remember that there was a revision to the qualification rules for high ratio first mortgages requiring insurance. In effect, prior to 17 October 2016, a mortgagee might qualify for a 20% greater mortgage. So, what effect did that have on the market? Many observers might now say “nothing”, while others might say “wait and see”. One could have applied for and obtained a higher mortgage principal calculated on the older requirements prior to 17 October 2016. That mortgage approval would generally last for 60 days, that is, until 17 December 2016.
That means that we might not see the effect of the new mortgage rules until January or February of 2017.
Brian Madigan LL.B., Broker