Toronto

Toronto Real Estate Sales Fall To Lowest Level Since 2009 Recession

Toronto real estate buyers are dropping like flies, but prices are holding. Toronto Real Estate Board (TREB) numbers show prices increased in March. The rise in prices came with the fewest sales since 2009, and second highest inventory since 2014.

Toronto’s Proprietary “Benchmark” Rises

The price of a typical home in Greater Toronto increased. TREB reported the typical home hit $779,100 in March, up 2.6% from last year. The City of Toronto benchmark reached $863,800, up 5.55% from last year. Both numbers made an abrupt jump, considering the benchmark is a multi-month average.

Greater Toronto Benchmark Price

The price of a “typical” composite home across Greater Toronto.

Source: TREB. Better Dwelling.

The pace of growth for this metric did show improvements. Both TREB and the City broke the pattern of deceleration for the first time since December. One month higher isn’t a trend reversal, but it does mark the end of consecutive deceleration. Prices remain around 4% lower than the peak reached in May 2017.

Greater Toronto Benchmark Price Change

The annual percent change of TREB’s benchmark price for all home types.

Source: TREB. Better Dwelling.

Note For The Nerdies In The Back: February 2018 also showed a much larger than normal decline than typically seen in an index. The abrupt movements over both years could be due to a low volume distortion of seasonal adjustments. Major discontinuations resulting in level shifts require identification and modification from an analyst. In vanilla english, outlying prints like recessions result in noise that need an analyst to correct. This isn’t a recession, but sales abruptly falling is a similar discontinuation. It’s unclear if TREB uses analyst intervention to remove distortion and noise. Even if it was clear, a full breakdown of the intervention would be required to understand the impact</Nerdery>. 

The median sale price of composite homes made more conservative gains. TREB median sale price climbed to $690,000 in March, up 2.98% from last year. The City of Toronto was a slightly lower $682,000, up 3.33% from last year. Yes, more than half of all homes being sold are 11.43% below the “typical” home price.

The average sale price made the smallest gains of any price metric. TREB average sale price reached $788,335, up 0.48% from last year. The City of Toronto hit $830,043, up 1.51% from last year. The average sale price isn’t great for determining home prices, especially from a composite perspective. Instead, it should be used to determine dollar flow, which is higher – but lower than inflation.

Greater Toronto Average Sale Price Change

The annual percent change of the average sale price of all homes.

Source: TREB. Better Dwelling.

Toronto Real Estate Sales Hit 10 Year Low

Sales of real estate slid to a multi-year low, led by declines in the city. TREB reported 7,187 sales in March, down 0.01% from last year – literally a sale less. The City of Toronto represented 2,545 of those sales, down 8.55% from last year. Worth a note that sales across TREB and the City received a 0.5% downward revision from reporting last year. The revision is within a typical range observed in past years. Either way, this represents the fewest sales for a March since 2009.

Greater Toronto Sales To New Listings

The number newly listed units per month, in contrast to sales.

Source: TREB. Better Dwelling.

Inventory Is Rising In The City, Falling In The 905

The total number of new listings fell across Greater Toronto. TREB reported 13,996 new listings in March, down 5.85% from last year. The City of Toronto represented 4,527 of those listings, up 2% from last year. The decline in new listings was exclusive to the 905 region.

Total inventory also fell in the 905, but increased in the City. TREB active listings fell to 15,576 in March, down 2.47% from last year. The City of Toronto represented 4,577 of those listings, and is up 11.52% from last year. Inventory levels are the second highest since 2014, before the great inventory crunch of 2016-2017.

Greater Toronto Active Listings

The number of listings available for sale in May 2018, across Greater Toronto.

Source: TREB. Better Dwelling.

Toronto real estate pricing is still a mess, so buyers should ask their agents to carefully go over comps. As for inventory, the great listing shortage is over, with listings now above the median of the 5 previous years. Sales slipping to the lowest level in 10 years however, could make it feel a little more roomy.

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32 Comments

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  • Reply
    Yuzheng 3 weeks ago

    US Secretary of State: Canada is a haven for money laundering using real estate.

    TREB: Prices are up!

    Dumb Money: “I better get in now, it’s my last chance!”

    Smart Money: 🍿

    • Reply
      Trevor 3 weeks ago

      lol. I doubt the average buyer would even know Canada made the list yesterday. They’ll be a house, with a new kid deep before they read an article on that report.

      • Reply
        Trader Jim 3 weeks ago

        Average buyer is still buying the land/immigration narrative. If average people could front run a trend, they wouldn’t be average. 😛

  • Reply
    Old Bittie 3 weeks ago

    I would be interested in more information on seasonal adjustment distortions. Any chance we could get an article on that?

    • Reply
      Trader Jim 3 weeks ago

      If we’re demanding things, I want a chart of these prices in USD. I’m pretty sure a lot of the price retention has to do with the CAD dropping.

      • Reply
        Rowper 3 weeks ago

        Big time. I’ve been thinking about that for a while… CAD devaluation is definitely lending a hand to inflated prices

  • Reply
    Labi 3 weeks ago

    Anecdotal, but I went to see a house a few weeks back. Almost put in an offer, but held back because of the reno-work required to make it livable. Listing was pulled when no offers hit the offer date, and my agent said they plan on relisting this spring when the market heats up. Wonder how many people think the market is going to be scorching this summer, so they’re holding their inventory back?

    • Reply
      M.Bury 3 weeks ago

      Labi,

      Probably lots and lots. Every month for the past year or so there have been roughly as many cancelled listings as those sold. I know a few people who have been waiting for the market to reheat since the summer of 2017. History shows eventually a large number of sellers can’t hold off any longer and the flood of listings ensues causing more rapid price declines.

      You can see it happening in Vancouver currently. GTA is not special, it’s just a chapter or two behind.

  • Reply
    SUMSKILLZ 3 weeks ago

    Why isn’t Toronto following Sydney AU and Vancouver? I thought we were in the club.

    • Reply
      Ethan Wu 3 weeks ago

      Toronto trailed Vancouver, which trailed Sydney on the way up. I imagine it’s the same trend on the way down. Australia is preparing for their first major recession in decades is my understanding.

      • Reply
        John 3 weeks ago

        To echo this, Toronto seems to be trailer Vancouver by about 8-12 months. Just go back to BD’s articles and read the last years worth.

        The real difference now is Toronto doesnt have an Eby.

  • Reply
    Ethan Wu 3 weeks ago

    Good insights on the seasonal adjustments. It’s hard to tell what’s in this hotdog. I suspect using the same seasonal adjustment model as Statistics Canada would have some flaws, since TREB’s inventory disappearing in 2016-2017 would not be reflective of the model used for GDP.

    Major price distortions potentially, which become self fulfilling (on the way up or down). Imagine telling someone that seasonally adjusted, a low inventory stock was trading much higher than the actual price traded? You’re now playing a guessing game on the direction.

  • Reply
    PW 3 weeks ago

    “more than half of all homes being sold are 11.43% below the “typical” home price.”

    I bet an agent couldn’t say that without the threat of being deplatformed from the TREB.

  • Reply
    Citizen 3 weeks ago

    Link to article on money laundering: https://globalnews.ca/news/5102137/us-canada-major-money-laundering-country/

    Given there are a bunch of reports on how major money laundering is in Canada, why isn’t this all over headlines in Canada? This house of cards better come tumbling down soon.

    No offense to Nipsey (RIP) but he’s getting way more coverage than that.

  • Reply
    Joe 3 weeks ago

    Seems like most people here and articles highlight the downside of the Toronto market. But in all honesty, I really don’t see prices crashing like many are saying. Prices are even up with fewer sales? Just saw a sale in Leslieville going for 1.85m where the sellers bought it for 1.235m 3 year ago with nothing done on the house. I see many 3m+ houses asking for 2m+ now in other areas. Essentially I think houses below the 1m/1.5m price points rising while those in the 2.5m/3m dropping resulting in a higher entry price to SFH in Toronto but cheaper luxury houses.

    I understand that in a logical/historical analysis, there are indeed many signs (weaker volume being one of the most obvious) that are pointing to a downward trend in prices but to be so confident that we will see prices crashing (calling it dumb money) seems a bit arrogant.

    • Reply
      MPW 3 weeks ago

      “Prices are even up with fewer sales”

      That’s one of the primary issues. Prices rising on lower volume is called a volume divergence, and precedes a correction. More lovingly, it’s called a dumb money trend.

      Amateur investors can’t sustain a trend, they’re who professional investors sell to. The same is being observed in the stock market right now – smart money is dropping in volume while retail is bidding prices higher. Liquidity is the difference between smart money and dumb money is smart money knows who they’re selling to. Dumb money thinks prices always go up.

      • Reply
        Neo 3 weeks ago

        Except this price rising on poor sales volume happened in 2011 for several months in a row and didn’t materialize into anything. There is going to need to be a major catalyst to shake the heard like a recession. Waiting on atricition could take awhile.

        • Reply
          MPW 3 weeks ago

          Yes, but prices were rising under maximum credit expansion. Once it exceeds that number, it’s exuberance. Over 1/5 of the city bought a new home in just the past 5 years. How often do you think the replacement cycle on an asset with a 25 year financing cycle? Typical person lives in a home for around 15 years statistically.

    • Reply
      rustinpeace 3 weeks ago

      I would not be surprised if a lot of these houses that are being bought up above comparables are being paid for with laundered money. If you are laundering money the goal is to clean as much cash possible. Whether they are overpaying is not a concern. Fact is that Toronto incomes will not support this market but laundered foreign incomes can. Anyone’s bet if the government will crack down on this. It will become an election issue once non owners outnumber owners or once economy starts falling with an increase in inflation

    • Reply
      Kwo 3 weeks ago

      When this happens, it’s called a Price Volume Trend (PVT) divergence. This specific type of divergence, where sales volume goes down but prices go up, is called a Bearish PVT Divergence. It’s called Bearish because it precedes a bear market. It happens similarly both in real estate and the stock market. Not a perfect indicator, but far from a positive sign.

      When it’s correct, it’s sort of the “last of the clueless jumping in”.

  • Reply
    Joe 3 weeks ago

    ‘Prices rising on lower volume is called a volume divergence, and precedes a correction. ‘

    I agree, this is usually what happens but we are in very unpredictable times…but I guess we’ll see. 🙂

  • Reply
    Jon snow 3 weeks ago

    i think people are forgetting how many folks are on the sidelines waiting for a small drop in the market to buy. Anyone who thinks Toronto real estate prices are going to crash and burn will be waiting a long time….the high demand areas will not drop much because buyers are ready to jump in.

    Any further drop below 15% will get snatched up by buyers and investors.

    Secondly, anyone trying to build a new home across the GTA, it will be priced higher because of increased municipal development costs, HST costs, higher land values and increased supply/labor costs.

    • Reply
      Grizzly Gus 3 weeks ago

      Yup that’s clearly whats going on in Vancouver. It’s like the Bitcoin bros last year. 20k was the last chance to buy before it shot to 1 billion. At 16k it was great opportunity to buy now that it was at a 20% discount. At 10k you better buy now at 50% off before it takes off again and gets to 200k. At 8k the so called “weak hands” were officially out and it was time to buy. At 4k “remember that amazon once lost 90% of its value and look at it today”!

      You know nothing Jon Snow.

      • Reply
        vnm 3 weeks ago

        lol, brilliant vbest monicker touche ever!

      • Reply
        Jon snow 3 weeks ago

        Comparing the Toronto real estate market to bitcoin/crypto market is laughable. It’s simply supply and demand my friend, dont need to over complicate it.

        And if you are anticipating the Toronto market to follow the Same path as bitcoin and lose 75% of its value than you you dont understand real estate markets..good luck with that!

        • Reply
          MPW 3 weeks ago

          “simply” is a word used when people have no facts to back up the following statement.

          • Jon snow 3 weeks ago

            Just look at the recent TREB home prices for q1 in 416 and 905 for facts about house prices.

            With all the measures the government is taking to stagnate price growth and still the market isnt tanking.

            There is already talks of lifting foreign buyer talks, reduced interest rates and changes to the stress test to stimulate sales. What do you think will happen to the Toronto market then?

            This is not the early 90’s where we will see close to double digit interest rates.

            This is not 2008 in the US with the subprime mortgage crisis.

            How much longer do you think the government will want to regulate the housing market with its impact on the national GDP

            But no your right. The Toronto market will tank like bitcoin, Canada will fall into its worst recession ever..as they say, scared money dont make none.

    • Reply
      M.Bury 3 weeks ago

      Jon,

      I have some tulips you might be interested in.

  • Reply
    Blancher 3 weeks ago

    Torontos market is staying afloat due to condo sales, investors who purchased 1 year ago are closing the deals today. The rental market is in high demand ,immigration has been
    helping to keep the demand up, were as Vancouver has been dropping like a stone because of lack of immigration, Asian speculators, and no real economy.

    I believe if the economy continues to stay somewhat healthy Toronto real estate will stay propped up..

    Let’s see what the economy looks like the second quarter,

  • Reply
    Blancher 2 weeks ago

    Mr Jon Snow …You nailed it..

    To add to you statement, Good areas will always sell, yes + – but they will sell even in the worst of economies .

    There are alot of people sitting on the side lines waiting for the blood to pour so they can pick up deals , its the cycle .economy 101

    Its the filler areas & 905 that will drop with larger % during a recessions. Make no bones about it we are in a recession and it will show its ugly face once Trudeau is removed from office & the new party opens the books..WOW.

    Vancouver is another story, DO they have an economy?????? think not
    That market was pumped up by Asian money, BC loved the income while it lasted.

    Now that the taps have turned off Id like to see what there going to say ..lol
    That market will crash like Alberta seeing that they cant sell there oil. By the way I read that SC Lavalin was thinking of buying the Trans Canada pipe line…

    Ontario is the only life line left , the City was collecting 1.5 % transfer tax on all the sales of homes. the high the sale price the higher the income.

    HUMM, didnt we see a 3% prop tax this year.. I think the province lost 1.5% aswell. they cant have prices drop.

    How about the banks .. If im not mistaken 37% of 4year mortages are up for re newal between 2019 & early 2020. what would happen to people and banks if the house prices drop to the point were there is no equity in the home..20%. that would be a disaster..in my opinion the banks & Trudeau will try to keep the life line open, this situation is like no other time in history were we can look back and say this is what we should do as a Gov/ Bank to aviod a disaster.

    Hold on to your CASH, CLEAN up you dept so you can ride the storm.. Trust me folks ive lived through 1989, I couldnt buy a job..

    Stay thirsty my freinds

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