February 2018 happened to be a very turbulent month for our market. With 5,175 residential transactions reported through TREB’s MLS® System, the sales were down 34.9 per cent compared to the record 7,955 sales reported in February 2017.
Indeed, this time last year, Toronto was experiencing a golden era of the seller's market, where homes got sold in 13 days on average and inventory was way down, limiting the options for buyers. Buyers usually made offers on any home they could find.
Looking at it this way, our market might be getting better. It’s no seller’s market anymore, for sure, but it is becoming much more balanced. Buyers finally have amazing inventory to choose from since active listings are up by 147.4 per cent and new listings by 7.3 per cent. But this doesn’t mean that we are not still in need of new listings. Toronto was experiencing listings shortage for so long, it’s only beginning to heal. We have a long way ahead of us.
The truth is, as a whole, GTA might look like a stabilizing market, but some segments are more active than others. Downtown is still a very hot area, where first time buyers and downsizers alike flock to the condo living. In fact, condo prices in this area are still rapidly growing. Average price for a condo in February was $529,782, which is 10.1 per cent more than last year. The average price as a whole was down by 12.4 per cent and the biggest change was recorded in the detached house segment. The average price for a detached home dropped by 17.2 per cent. The prices in the semi-detached and townhouses segment were down by 8.6 and 2.9 per cent respectively. The only segment getting more expensive was the condominium segment and dividing the sales by price only confirms that. The $400,000-$800,000 price range is the most active segment in the city. This just means there are still first time buyers eager to purchase a starter home.
The market might have had a slow start this year, but that doesn’t mean it will not continue strong. With all the new policies taking hold, buyers and sellers alike might have been hesitant to participate, but all new rules are steadily becoming a new routine, so we might see some surprising changes sooner than we think.
Richard Silver, Sales Representative, SVP-Sales
The sky is not falling. 2017 was a blip and our sales are down 34.9 per cent from last year. However, if you can forget the crazy 4 months of early 2017, then we are not in bad shape from our 2016 figures. (Prices are actually up 12% since 2016). As we have seen with the recent stock market shakedown, there are always blips in any market, even the good ones. The main difference with real estate is that we are not a liquid commodity.
The most interesting point in the most recent report is that 12 per cent price increase since 2016. This alone points to our ongoing issue with a lack of supply, and a Government that is trying desperately to slow the market by adding new taxes and new mortgage rules rather than opening up more areas for development and intensity within the GTA.
Will this change? Is the "Manhattenization" of Toronto the next step, the only option or the new reality? Can we slow the pace with taxes making the City more costly? Or, should we look at the whole GTA as one service area with one tax base, and one development plan and with a group of leaders whose responsibility was the GTA and not their local tax base? Can we put an end to the NIMBYism that dogs decisions of the local building departments and Municipal Boards? But, then, that is a whole other blog.
Rizwan Malik, Sales Representative, SVP-Sales
If we just look at a percentage then we have to question what that percentage is telling us. The overall sales might be down by 34 per centhowever, there are segments of the market that are flourishing. When we look at the $400,000-$800,000 range, this accounts for the most active segment in our market place today. Then we look at $1.25 - $1.4 Million and this is another part of the market that is highly active.
What this tells us is that people are still looking to enter the market as first time buyers and others are still looking to move up. It is very important to understand what these numbers are saying because now buyers are getting unrealistic expectations. They are going into very high demand areas and expecting to purchase a home for a 'steal of a deal' type of price and that just is not the case. High demand areas are still receiving multiple offers and selling for over asking. The pulse on the ground is very different from what is being reported in the media.
Jim Burtnick, Broker, SVP-Sales
The most appropriate quote that comes to mind for February's stats is: "Follow the trend lines, not the headlines" (Bill Clinton).
1st HEADLINE: "Sales are down almost 35 per cent this February from February 2017" TREND: February 2017 represented a record month EVER for sales in ANY February. So comparing to an anomaly is going to result in distorted stats line this supposed 35% decline.
2nd HEADLINE: "The number of new listings entered into TREB's MLS(R) system were up by 7.3 per cent compared to February 2017" TREND: The level of new listings remained below the average for the month of February for the previous 10 years! We are still in a supply shortage situation and there is no end in sight for this.
3rd HEADLINE: "The overall average selling price for February sales was down 12.4 per cent year-over-year." TREND: February 2018 average selling price was UP 12 per cent than the average reported for February 2016. This appreciation over 2 years is far and above the rate of inflation for the past two years.
Given we are in a supply shortage, I expect the TREB's forecast for the remainder of 2018 to ring true. That is, expect growth in sales and selling prices to continue their upward trajectory, albeit at a more moderate and sustainable pace, as we move through the rest of 2018.