Toronto real estate just wiped out a year of price gains by some measures. Numbers from the Toronto Real Estate Board (TREB) show that prices are making substantial declines. These declines are being accompanied by declining sales, and rising inventory. Is it a crash? Let’s dive through the numbers.
Toronto Real Estate Prices Dropped Up To $52,000
Toronto real estate prices are dropping, and it would be a stretch to find positive news in this release. The composite benchmark price fell to $755,400, a 14.25% increase from the same time last year. While this number is up from last year, it’s also down 7.4% from the peak composite price established in May 2017. By this measure, it’s a correction, but not crashing.
Over the past few months, the average price has been dropping quickly. The average sale price in August 2017 was $732,292, a 3% decline from the same time last year. This is a massive 20.1% drop from the April 2017 peak established. Prices are now back to April 2016 levels, wiping out more than a year of gains made on this metric. By this measure, this is definitely crash territory, and possibly market capitulation.
Worth noting here that average monthly price declines are showing deceleration. Prices dropped by 1.87%, which is the smallest decline since April 2017. This doesn’t mean that it will reverse, and prices will start climbing soon. It does stack the odds in favor of a smaller loss (or even slight increase) in September though. Expect increased volatility, and big swings in prices until the monthly channel shows smaller swings.
Prices Declined $52,000 In Some Neighborhoods
Every single neighbourhood in Toronto saw the benchmark price fall. The greatest monthly drop was observed in C02, which is the Yonge and St. Clair/Annex North region. The C02 composite benchmark is now $1,166,100, a decline of $52,000 from the month before. The smallest drop was in C01, Downtown Toronto. In C01, the composite benchmark fell to $630,000, a $1,200 decline from the same time last year.
Active Listings Are 65% Higher Than Last Year
Inventory continued to build, but new listings slowed down. August saw 11,523 new listings, a decline of 7% from last year. Active listings rose to 16,419 listings, up 65% from the same time last year. Active listings were heavily gamed in 2016, so don’t put too much stock into the massive increase. However, cancelled listings over the past four months have been higher than any number seen over the past 5 years. Something worth noting, as this cancelled inventory may appear sometime in the future.
Sales Dropped 35% From Last Year
Toronto real estate sales were higher than last month, but showed declines from last year. TREB reported 6,357 sales, a 7% increase from the month before. This represents a 35% decline from the same time last year. Breaking that number down, the 416 saw 2,480 of those sales, down 27% from last year. The 905 saw 3,877 of those sales, a massive 39% decline from last year. Sales are dropping across TREB, but much faster in the suburbs than the proper City of Toronto.
Anyway you measure it, Toronto real estate isn’t throwing bullish numbers. Average prices have now declined for 4 consecutive months, with few signs the market is firming up. One of those few signs is the gap between sales to new listings is narrowing. As this gets tighter, the market could find better footing.
As always, we’ll be breaking this down segment by segment over the next few days.
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