December didn’t quite bring holiday joy to the Toronto real estate market. According to the latest release from the Toronto Real Estate Board (TREB), single family homes suffered the largest decline in a year. While that’s disappointing news for people looking to sell, less inventory and more sales could create an environment that can push prices higher in the near term.
Prices Declined
The average price of single-family detached homes in Toronto took a hit, and whether it’s seasonal is up for debate. The average across TREB dropped almost 4% ($42k), to $1,016,145. That number was a little higher in the 416 area, where prices dropped $59k to $1,286,605. The detached average in the 905 fell the least, only shedding $23k in value to $934,055. Agents I’ve spoken too were quick to explain this is a “seasonal drop,” however it’s probably worth noting this wasn’t the case last year. Actually, last year prices increased in December.
Toronto Detached Home Prices
Inventory Crunch
Despite the price decline, sales increased and inventory was just a teensy bit scarce. December saw 2,259 sales, an increase of 5.8% when compared to the same month one year prior. Meanwhile, new listings dropped 12% vs the same time last year, and the total number of active listings declined by a whopping 38% to 2,224. Really this is a textbook case of demand triumphing over supply, which makes the decline in prices all the more curious.
Toronto Detached Sales vs. Listings
Absorption Is Higher
Higher sales and lower inventory means a higher rate of absorption, but how does this compare as a trend? December saw absorption of single-family homes hit 50%. This is two points higher than the month prior, and a whopping 13 percentage points higher than the same month last year. Generally speaking, prices increase when absorption is higher than 20%, and decline when they’re below 10%. As always though, this includes rational players – as opposed to Toronto’s emotional players.
Toronto Detached Absorption
Now one month isn’t a trend, so you’ll have to wait for confirmation in future months to determine which way prices are heading.
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Photo via Anthony Easton.
[…] chart by real estate website Better Dwelling shows that average detached homes saw some of their weakest growth year-over-year in the Rosedale […]