Toronto real estate set a quiet record, that went largely uncelebrated last month. Numbers from the Toronto Real Estate Board (TREB) show that the median price declined. Boring, right? Not when you realize that decline is actually the first annual decline since the Great Recession. While it’s not an end of time announcement, here’s why you should care about it.
Toronto Benchmark vs. Median Real Estate Prices
The benchmark price is the most commonly used measure, but it doesn’t capture rapid movements. The Canadian Real Estate Association (CREA) claims it’s the most accurate measure, but some agents argue it’s delayed by up to six months. The fact that the method is opaque and there’s no way to verify the numbers, also makes people a little skeptical. This is when you would turn to using the median price, which captures movement much faster.
No method is perfect, and tracking median prices is no exception. The median sale price is the midpoint between all sales. That is, half of sales are above this price and half are below. Due to how median prices are measured, it can be skewed by a shift to buying cheaper units (like condos), or a shift to more expensive units (like detached units). It’s the more common method of tracking real estate prices, but there’s definitely a trade off. It’s best used in conjunction with benchmark prices, if you’re actually into buying as an investment. If you’re just buying it because you want to, who cares – right?
The Median Sale Price For Toronto Real Estate Fell To $625,000
The median price across Greater Toronto is falling. TREB reported a median sale price of $625,000, virtually unchanged from the month before. This represents a 0.95 decline when compared to the same month last year. The median price remains at December 2016 levels. If you were suspicious 2017 was a waste of a year, you have another data point to add to your argument.
Source: TREB. Better Dwelling.
The Decline In Median Price Was The First Since May 2009
Not very exciting, I know – but there’s a very important detail to take away. This is the first time the median price showed an annual decline, since May 2009. The last time the annual median price decline was this large, was the month before that – April 2009. Considering March 2017 was the highest annual increase in decades, it wouldn’t be all that strange to see the median price fall further into negative territory. Sudden peaks in price growth, are often met with troughs of price declines. That’s how healthy markets work, they display balance.
Source: TREB. Better Dwelling.
The median sale price might not tell you how much to pay for a home, but it is an indicator worth noting. The shift to smaller, or cheaper units could indicate a rapid shift in sentiment. When this value drops, home prices are declining, people are buying smaller units, and/or less people are upgrading. More important, this is the first time in nearly a decade it’s dropped.
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