Toronto Market Steadies in April 2017
The Toronto real estate market has been “red hot”, but the market appears to have slowed somewhat in April. This is the newly released report from the Toronto Real Estate Board (TREB). I think you will find it interesting.
“Strong Growth in New Listings in April
TORONTO, ONTARIO, May 3, 2017 – Toronto Real Estate Board President Larry Cerqua announced that Greater Toronto Area REALTORS® entered 33.6 per cent more new listings into TREB's MLS® System in April 2017, at 21,630, compared to the same month in 2016.
New listings were up by double-digits for all low-rise home types, including detached and semi-detached houses and townhouses. New listings for condominium apartments were at the same level as last year. Total sales for the TREB market area as a whole amounted to 11,630 – down 3.2 per cent year-over-year.
One issue underlying this decline was the fact that Easter fell in April in 2017 versus March in 2016, which resulted in fewer working days this year compared to last and, historically, most sales are entered into TREB's MLS® System on working days.
"The fact that we experienced extremely strong growth in new listings in April means that buyers benefitted from considerably more choice in the marketplace. It is too early to tell whether the increase in new listings was simply due to households reacting to the strong double-digit price growth reported over the past year or if some of the increase was also a reaction to the Ontario government's recently announced Fair Housing Plan," said Mr. Cerqua.
The MLS® Home Price Index (HPI) Composite Benchmark Price was up by 31.7 per cent year over-year in April 2017.
Similarly, the average selling price for all home types combined was up by 24.5 per cent to $920,791. "It was encouraging to see a very strong year-over-year increase in new listings. If new listings growth continues to outpace sales growth moving forward, we will start to see more balanced market conditions.
It will likely take a number of months to unwind the substantial pent-up demand that has built over the past two years. Expect annual rates of price growth to remain well-above the rate of inflation as we move through the spring and summer months," said Jason Mercer, TREB's Director of Market Analysis.”
We should have a look at the prior year. How well did that go and what were the trends?
Please note that the numbers shown above represent the average sales prices for single family properties in the Greater Toronto Area, ending on that month or that year. This includes detached, semis, townhouses, condominiums and co-ops.
The starting number for the next year is really the December 31st number for the previous year.
The year-end numbers shown above are actually averages of that particular year, so the year end comparison fails somewhat. Nevertheless, you will see the trend.
The starting point is 2005, since that was the commencement point for the Home Price Index, a measurement tool used by TREB.
Some Fun with Math
Let’s figure out the 10 year performance. To be exact, we should go back to April 2007. However, none of the numbers will work out precisely but they will all illustrate trends. So, we will go from 2006 to the end of 2016 and then add four months.
That means we will start at $351,941 and go to $920,791 That’s an increase of $568,850 over a period of 124 months, or $4,587.50 per month, or $55,050 per year. That’s an increase of 15.64% per year over the decade.
Let’s try the 5 year performance. Our starting point would be 2011. Remember the 2011 figure is the start of 2012. The 2012 figure is the end of 2012.
So, we start with $465,014 and end up with $920,791. That is an increase of $455,777 over 64 months (full five years plus four more months), or $7,121.52 per month, or $85,458.24 per year. That’s an increase of 18.38% per year over the five year period.
What about our rough one year performance? The numbers will depend when we start and how we do our calculations.
Let’s stick with the same methodology. 2016 started out at $622,121, and rose to $920,791, which is an increase of $298,670 over 16 months, or $18,666.88 per month, being $224,00.56 per year, or 36.01% per year.
If we go year over year and calculate the end of April 2016 to the end of April 2017, we go from $739,762 to $920,791. That’s an increase of $181,029 or $15,085.75 per month, which is 20.39% per year.
You will have to appreciate that as our timeline gets shorter our numbers are less meaningful.
The basic conclusion is that the market has been very hot. High rates of return are evident over recent periods, no matter how you calculate the numbers.
So, what’s going to happen this year?
Brian Madigan LL.B., Broker