Toronto

Toronto Real Estate Listings Were Up Over 172% In December

Toronto Real Estate Listings Were Up Over 172% In December

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.

Source: TREB.

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.

Source: TREB.

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.

Source: TREB.

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.

Source: TREB.

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.

Source: TREB.

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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6 Comments

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  • Reply
    Foreign Investors Out of Markham 11 months ago

    Can you do a breakdown of price distribution? We have a lot of flips in my neighborhood over the past year, that are being sold for a loss. It’s confusing to hear prices are still 7% higher, but finding people are losing 10s of thousands on their flip. Thanks.

    • Reply
      Joe 11 months ago

      I believe that’s because it’s based on averages… some neighbourhoods have increased, and some have decreased. Also remember the land transfer taxes and realtor fees which can add a large amount to the overall flip cost.

    • Reply
      bluetheimpala 11 months ago

      How do you know it was at a loss? Vs Comparables? That’s the problem.
      ex: 1 donut = $1, I hold onto my donut and price sky rockets to $3 as the doughy money piles in. If I was renting out my donut (think the odd lick to a stranger) and generated cash flow then I don’t need to sell. Perception meets reality and the price of a Donut is set to decline. If I sell my donut immediately at $2.00 did I experience a loss? Or did I sell below a market I helped to manipulate and cash out with 100% asset appreciation in a matter of 12-24 months. You get the idea.

  • Reply
    Mike 11 months ago

    Doesn’t even begin to touch the increase of inventory that hits once speculators start getting worried about liquidity. Even the former Chief Planner for Toronto has said she believes Toronto was building faster than people can occupy. These units are probably sitting empty, and waiting for the right time to sell.

    • Reply
      bluetheimpala 11 months ago

      Ding ding ding we have a weeeenner…spot on Mike. Speculators bought low or mid,were part of the rise, so taking a 10-30% hit off the ‘comparable’ gives them a healthy profit (plus the cash they had if they rented it out). A cabbage town semi sold for $1.5 million from $300K in 2012; money was put in no doubt but lets assume they are in for $500K so total is $800K. They could sell for $1M and walk away with $$$. The guy who 2-6 months prior bought the one down the road for $1.4 (with a $1M mortgage), is in for an actual loss when the market comes down 15-20% over a 12-18 month period.

      People don’t understand this aspect. Maybe I don’t understand it (I use donut example to help me understand complex issues). A gain or loss is always relative but most people look at selling below the current ‘market price’ as a loss . Sure for the guy who bough late Q3-Q4 2016 or Q1-Q2 2017.

  • Reply
    Tommy 11 months ago

    The market is balanced. If the trend continues and a crash is on the horizon, I can’t wait to invest when prices drop.

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