Unless you've been living under a rock these past days, you probably noticed that the market started changing with the beginning of new year. GTA REALTORS® are reporting lower numbers of sales. There were exactly 4,019 residential transactions in January 2018, which is 22.0 per cent lower than in January 2017.
The lowest number of sales was reported in the detached home segment, with a -26.0 per cent change. They were followed by condo sales with a 21.9 per cent drop. This could be a sign that Toronto condo prices reached the buyers' maximum spend limit. The sales in the semi-detached homes and townhouse market dropped by 13.1 and 12.6 per cent respectively.
It's very difficult to pinpoint a single culprit in these times of change, since new mortgage rules, Fair Housing Plan and prices hitting peak numbers are all possible contributing factors. But don't ring that sale-pocalypse siren just yet. There are more factors in play that give an insight into the situation. Numbers don't lie, but data without context is dangerously free for interpretation. And precisely context is needed for understanding current TREB numbers.
Let's look back to January 2017 first. At the time, the market was at the peak, TREB was reporting record numbers and condo prices just started to rise to the exponential highs as we experiened through the entirety of last year. January 2017 numbers reached 5,188 sales reported by TREB and average price for a home was $770,745. You could buy an average condo unit for $442,598, which was still a very good price, so there's no wonder sales in this segment were growing by 26.7 per cent at the time. Current condominiums in January 2018 were selling for $507,492 on average and much higher prices were recorded in the downtown area. That is a 14.6 per cent growth in price just in this segment. Other segments decreased in prices last month. The biggest change was recorded in detached homes, that are now selling for $970,823 on average. Just for reference, in January 2017 it was $1,068,670, which is a +9.1 per cent difference.
It was truly a seller's market back in January 2017, where supply was low with new listings down by 17.6 per cent and active listings by 49.5 per cent. There was virtualy no inventory to speak of and an average home sold in 19 days. Toronto market was really crazy at the time. If we take into consideration numbers from January 2018, there's finally a balance between the supply and demand. Current new and active listings are up by 17.4 and 136.3 respectively. Sellers will eventually sell, especially if their home has a prime location and walking distance to transportation, and buyers have a chance to think the investment through and not make any rash decisions. In fact, a balance like this might be what we were looking for all along.
Richard Silver, Sales Representative, SVP-Sales
Compared to last year the market has definitely softened however with the influx of listings there are great opportunities for buyers.
Don’t let the lower numbers fool you in certain areas, as the market is strong in price ranges and locations. The increase in listings allows us to do our negotiating and that is great news for all.
Rizwan Malik, Sales Representative, B.Comm
The January stats are not very shocking. The sales activity might have dropped by 22 per cent but new listings also climbed by 17 per cent. Supply is meeting demand and in some market segments exceeding demand. This is allowing us time to breathe, and gives buyers a chance to think before they act and sellers are accepting terms and conditions that they normally would not consider. Having said this, there are still segments of the market where buyers are paying over asking or "true market value" and properties are selling in multiple offers. These areas are generally the least hit with most market fluctuations and this past month was no different.
Jim Burtnick, Broker, SVP-Sales
The headlines do not tell the whole story here. While sales are down 22 per cent January 2017 over January 2018, one needs to bear in mind that January 2017 was a record month for sales with 5,155 sales. January 2018 had 4,019 sales - still a healthy number of sales. People are still buying and selling. We have gotten used to setting new records in real estate, be it for the number of sales or average sale price. We are entering a more balanced (and healthy) market now, so new records are not the norm either. According to TREB's forecast which I concur with, the first 2 quarters of 2018 might be the best time to be a buyer and the last two quarters will likely be the best time to be a seller. What I would add to that is that location (central, close to subways and local/walkable amenities) will be areas that will be in more demand and therefore will appreciate at a quicker pace. Once again the old adage of "Location, Location, Location" will be more relevant in 2018.