One data point doesn’t make a trend, but it does make for an awkward wait for the next one. According to the latest numbers from the Toronto Real Estate Board (TREB) prices dropped, but buyers faced a shrinking number of listings, that are being absorbed faster than the same time last year.
Prices Close The Year Higher
The average price of a composite benchmark dropped by 6% from the month prior, but still closed out 2016 well. The average closing price of a home was $730,472 – up 17.3% from the same time last year. The 416 area represented 38% of all dollar volume in the GTA, but had a slightly lower average at $710,307.
You might have heard the average reported by most outlets as 21%, as per the prepared notes from TREB. However, they curiously measured the change between January 2016 to December 2016. Sure, it pushes the number up by almost 4 percentage points, but 11-months of data is an odd way to group numbers.
Listings Are Shrinking
Despite the average price getting a downtick, sales are increasing and listings are becoming more scarce. In December 2016, 5,338 sales were logged through the MLS. This represents an 8.6% increase from the same time last year.
The decline of listings was pretty clear across the board. New listings are down 11.7% from the same time last year, to only 4,188. Active listings in December were 4,746, which is a 48.1% decrease from the same time last year. Generally speaking, a scarcity of listings provides upward market pressure.
Absorption Is Higher
Absorption of new listings remained high, especially when compared to the same time last year. The rate got an uptick from last month to 53%, which is an increase of 51% from December 2015. This increase in demand dropped the number of days on the market to 20, a 31% decrease from the period last year. Generally speaking, it’s a seller’s market when the rate of absorption is above 20%, and a buyer’s market below 10%. Although emotionally driven buying tends to buck technicals.
Don’t put on a sandwich board and start ringing a bell to declare the end of Toronto real estate just yet. December often features a downtick on average prices, as sales skew towards lower priced homes. December 2015 saw a 3.75% decline from the month prior, and a 3.7% decline from November 2014 to December. 6% is substantially higher than two previous years, but we’ll need at least another couple of data points to draw a clear conclusion.
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Photo via Rick Harris.