May 8, 2018 | Market Update
Toronto’s market showed significant signs of stabilizing this April. On the one hand, Toronto Real Estate Board (TREB) numbers were once again down on a year-over-year basis. On the other, the drop in month-over-month numbers wasn’t as steep as it was earlier this year—an encouraging development. Here’s what’s really going on.
Making sense of year-over-year numbers
Year-over-year numbers continue to colour the perspectives of many investors. This April, the average selling price decreased by 12.4 per cent from April of last year (2017), and overall sales decreased by 32.1 per cent. Of course, it’s important to reiterate what a truly unusual year 2017 was for the market.
In 2018, stress tests and increased borrowing costs have resulted in decreased sales activity and prices. That said, the drop hasn’t been nearly as dramatic as some analysts expected. And it looks like things may already be evening out.
Given the unusual market conditions this year and last, looking at month-over-month numbers can help provide a fuller picture of what’s going on. April sales were down just 1.6 per cent from March of this year (for comparison, they dropped 24 per cent between December, 2017 and January, 2018).
What’s happening in the high-end market?
While changing rules and regulations partially account for year-over-year changes, they’re not the only factor at play. In part, the decline in average sale prices can be attributed to a shift in the mix of homes being sold.
This April, there weren’t nearly as many detached home sales over the $2 million dollar mark as there were last year. High-end houses that met this criteria accounted for 5.5 per cent of total detached sales last month, in contrast to 10 per cent during the same month last year. This drop is impacting overall sales numbers.
Meanwhile, the condo market is still stronger than the detached house market. Sales activity has slowed somewhat, but April condo sale prices were 3.2% higher than they were in April of 2017.
Seeing the big picture
What does all of this mean for buyers and sellers? It means that while recent legislation is still having an impact on the market, that impact is waning. TREB president Tim Syrianos summed up some of the changes we can expect to see in the near future. “A strong and diverse labour market and continued population growth based on immigration should continue to underpin long-term house appreciation,” said Syrianos.
House appreciation doesn’t necessarily signal bad news for buyers. On the whole, healthy, balanced conditions are good for Torontonians and the market in general. Consider the words of TREB’s Director of Market Analysis, Jason Mercer. In the recent TREB report, Mercer stated that the market “should support moderate increases in home prices as we move through the second half of next year.” We’d like to emphasize the work moderate.
Looking to better understand the market? We interpret the data as it becomes available to determine how it impacts buyers and sellers. Get in touch to learn how our up-to-the minute knowledge can help you get the best price.