Toronto was facing falling sales and low inventory in November 2018. GTA Realtors reported 6,251 residential transactions through TREB’s MLS® System this month. This is 14.7 per cent less than last year. But not everything is as it seems.
The end of 2017 was marked by many regulations ready to come to effect in January 2018. So a spike in sales appeared through November and December 2017. The current balanced market in Toronto simply stopped chasing new records every month and it shows in the current numbers that might not be high but remain steady.
There was a total of 2,665 detached homes sold this November, which makes 14.2 per cent less than last year this time. Same goes with 1,891 condos sold, down by 14 per cent. Semi-detached and townhomes have fallen by 15.7 and 16.4 per cent respectively.
The bigger problem Toronto might be facing these days might be the lack of inventory slowly creeping in. New listings were down by 26.1 per cent in year-over-year comparison. Active listings dropped by 9.8 per cent. Of course, the urge to sell to eager buyers before OSFI-mandated stress test took effect last year, could motivate more sellers to list their home before fewer buyers will be able to enter the market. But current listing to sales ratio remains a concern with 16,420 active listings in November and 10,534 new listings. Of course, the 905 suburban area of Toronto is currently experiencing a higher number of listings than the 416, balancing the market and giving buyers an alternative.
The average price remained more or less steady with only 3.5 per cent increase across segments. However, if we dissect these segments, changes become more apparent. For example, semi-detached homes had a big spike in price in the 416 area in November. Price went up by 17.2 per cent in year-over-year comparison. Also, the condominium segment appears to be rising in prices with 7 per cent in 416 and 9.5 per cent in suburbs. This might indicate the rising demand for certain segments across areas, as well as lack of listings that might be persistent in this front.
Jim had a closer look at the report:
"Steady as she goes" or Goldilocks - "not too hot, not too cold;" either of these adages could rightly describe the current TREB November market report. Price appreciation has moderated and is more in the with current inflation levels. Sales are steady and simply not setting newer and newer records as we witnessed over the previous few years. To me, this is a sign of a healthy marketplace or as often referred to, "a soft landing" for real estate.
But dig a little deeper and if you dissect the marketplace by categories, you will see:
- Demand far stronger than supply in the 416 (original Toronto) marketplace. Yes, we are still seeing offer dates here and multiple offers, although not as prevalent as before.
- The 905 (suburbs) areas are experiencing a higher number of active listings (more sellers' competing), price moderation and longer days on the MLS (R).
- Condos in the prime downtown Toronto are experiencing tremendous demand and price appreciation of upwards of almost 10 per cent.
- Prime downtown condo rentals are experiencing multiple offers with a vacancy rate below 1 per cent (a healthy vacancy rate is considered closer to 4 per cent so no wonder why this category is so much in demand).
So, my conclusion to all of this? The adage of "location, location, location" has never been more apt. I would add to this that the category of real estate that is inversed to what was traditionally seen as the most in-demand (and this is simply due to declining affordability).
Just one more adage: Make sure you are working with a Realtor(R) that understands this:
"Follow the trend lines, not the headlines" - Bill Clinton