Toronto real estate finished its roller coaster year higher, but with some things worth noting. Toronto Real Estate Board (TREB) numbers show prices declined for a seventh consecutive month in December. Even with the declines, prices are still are still higher than the same time last year. The real story is inventory continues to climb, while sales are still dropping.
Toronto Real Estate Prices Decline For 7th Consecutive Month
Toronto real estate prices continue to slide from peak, but are still up compared to last year. The composite benchmark price across TREB reached $743,500 in December, up 7.43% compared to last year. In the City of Toronto proper, the benchmark price reached $793,900, 11.67% higher than the same time last year. Prices are up on annual basis, but it’s worth noting the tapering of price gains.
The price growth trend is currently in a down cycle across TREB. December’s benchmark price is 0.16% lower than the month before, the 7th consecutive month we’ve seen a decline. Benchmark prices are up on an annual basis, but they’re down 8.93% from the May 2017 peak. This is one of the most interesting trends that you should be keeping an eye on.
Average Sale Price Is Down Over 20% From Peak
The average price is up slightly, but is way off peak. The average price of all sales across TREB fell to $735,021 in December, 0.7% higher than the year before. This is down a massive 20.07% from April 2017’s peak of $919,614. Try not to misread the significant decline here.
Remember, average prices aren’t great for determining how much people are paying for a type of home. It’s better indicative of the flow of money into real estate. Average prices climbing are often a sign that high end buyers (often better investors), are in charge of the market. Average prices falling is often indicative of low end buyers, who are often more prone to FOMO, taking control of the market.
Over 170% More Inventory Than Last Year
Toronto real estate inventory is much higher than last year. New listings across TREB reached 6,330 in December, a 56% decline from the month before. The monthly decline is seasonal, but new listings were still up 51% compared to last year. Active listings, which are the total unsold listings at month end, reached 12,926 in December. This represents a 172% increase compared to the same time last year.
The rising inventory issue could get a lot more complicated, as a huge number of projects are expected to complete in 2018. Most of these projects have been pre-sold, but the number far exceed the household formation trend. There’s a good chance that many of these units will be flipped into the market, potentially giving us even more than expected inventory.
Toronto Real Estate Sales Fall Over 8%
Toronto real estate sales declined across TREB. TREB reported 4,930 sales, a 33% decline – which is seasonal. This still represents a decline of 8% compared to the same time last year. More inventory and less sales generally lead to more buying selection – which often leads to lower prices. This is another issue that may get more complicated, as we approach a record year for completions.
Generally prices continued to fall, sales declined, and inventory is significantly higher. It had been widely reported that a number of buyers were “squeezing in” to close before new mortgage rules hit this year. If agents are correct, this means the sales trend was artificially high, since it was a one time bump. The trend would have been naturally lower, which would mean even more downward pressure on prices. Either agents lied about a rush, and the market is getting better. Or they told the truth, and the market is going to slide further from B-20 rules. Take your pick.
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