Toronto real estate showed signs of life for the first time in a year, although there are a whole lot of footnotes. Toronto Real Estate Board (TREB) reported Greater Toronto price declines improved in May, compared to last month. Although they’re still down from the year before. Sales definitely did spike though! … but only in the suburbs, and mostly due to a downward revision of last year’s numbers. The joys of trying to compare an almost normal month of sales to last year’s overreaction to policy.
Greater Toronto Real Estate Prices Are Down Over 4%
The price of a typical home in Greater Toronto is lower, but it’s more complicated in the city. TREB reported a composite benchmark price of $772,100, down 4.76% from last year. The City of Toronto benchmark reached $840,200, up 1.29% from last year. Most of the price declines were due to weakness in single-family prices, but condos did continue see deceleration of price growth.
Greater Toronto Benchmark Price
The price of a “typical” composite home across Greater Toronto.
Source: TREB. Better Dwelling.
The benchmark price’s rate of growth did improve from last month. The 4.76% decline across TREB is slightly better than the 5.4% decline the month before. The 1.29% increase in the city is higher than the 1.01% increase observed the month before. Of course, a negative is still a negative, but the City of Toronto did post a gain… although the city is still below inflation.
Greater Toronto Benchmark Price Change
The annual percent change of TREB’s benchmark price for all home types.
Source: TREB. Better Dwelling.
Greater Toronto Saw The Median Selling Price Rise Over 3%
The median sale price showed strong improvement from last year. TREB reported a median sale price of $682,000, a 3.97% increase from last year. The City of Toronto had a median sale price of $686,500, up 8.11% from last year. The median sale price doesn’t adjust for size and quality, but it is a more common price metric for international buyers.
The Average Sale Price Increased Over 2%
The average sale price saw a bump higher across Toronto. TREB reported an average sale price of $807,871, an increase of 2.01% from last year. The City of Toronto had an average sale price of $870,559, up 5.16% from last year. The 905 is in real estate purgatory with an average price of $768,945, almost completely flat from last year. The average sale price is most useful for gauging the direction of dollar flow, which is higher. One month isn’t a trend, but it’s worth watching this number for improvements.
Greater Toronto Average Sale Price Change
The annual percent change of the average sale price of all homes.
Source: TREB. Better Dwelling.
Greater Toronto Real Estate Sales Are Up, But Lower In The City
The most interesting numbers this month are sales, which are up… with a tiny asterisk. TREB reported 8,082 sales in June, up 2.39% from last year’s updated numbers. Shoot, I should explain. In 2017 they reported 7,974 sales, which was revised down to 7,893 in this month’s numbers. Compared to the numbers reported last year, sales are up 1.35%. Revisions are normal, but it is interesting to see a buttload of sales that were reported didn’t go through. Anyway, back to this year’s numbers.
Sales in the city slid a little lower, but made pretty solid gains in the suburbs. TREB reported 3,096 of sales occured in the City of Toronto, down 0.67% from last year. The 905 reported 4,986 sales however, up 4.39% from last year’s revised numbers. Yup, the suburbs actually drove sales growth last month.
Greater Toronto Sales To New Listings
The number newly listed units per month, in contrast to sales.
Source: TREB. Better Dwelling.
More Inventory In The Burbs, Less In The City
New listings across Greater Toronto are down, although that may not mean what we think it does. TREB reported 15,922 new listings in June, a 18.6% decline from last year. The City of Toronto was home to 5,243 of those listings, a 19.57% decline from last year. The number of cancel and re-lists have dropped dramatically from last year since we first confirmed it was happening with TREB. This year’s numbers may more accurately reflect re-listings. Agents we checked with noticed an improvement, but said it was still a problem.
Active listings, the total homes available for sale at month end, are on the rise. TREB reported 20,844 active listings at the end of June, a rise of 5.91% from last year. The City of Toronto reported 5,748 of those listings, down 4.2% from the year before. Historically, with the exception of last year, May is the peak for active listings, with a slight taper into June. Toronto has now returned to that scenario.
Greater Toronto Active Listings
The number of listings available for sale in May 2018, across Greater Toronto.
Source: TREB. Better Dwelling.
Greater Toronto did see sales and price declines improve from May, but exercise some caution. Last year’s overreaction to Ontario’s Fair Housing Plan make this year’s numbers look better. However, you’re comparing it to an artificially depressed month of sales activity.
We observed the same issue in British Columbia, when they implemented a foreign buyer tax. Non-residents accelerated their buys to squeeze in before the tax. This resulted in an extremely low month of sales after implementation. One year later, a spike in foreign buying activity was mistakenly reported. In actuality, it was just a comparison of an artificial month that doesn’t exist in a typical market. To see how the trend actually evolved, you needed to wait a few months to compare. You should probably do the same with these numbers as well.
As always, we’ll be breaking down these numbers by segment over the next few days.
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Doesn’t look like a crash to me!
You’re down about $100k if you bought a detached in Toronto from last year, that doesn’t look like it’s booming either.
Can all of the losers that became real estate agents go back to working at Tim Hortons? Leave it to people that have been working in the industry for longer than 2 years.
No shit, TREB director this morning: “Don’t drink the koolaid”
lol. Important to find agents that have been agents for longer than a week. They haven’t had to prepare buyers for downturns, a natural part of a healthy real estate market.
Didn’t TREB just bitch slap OREA for being overly pessimistic? Now a former TREB director is suggesting the TREB numbers aren’t that rosy. Infighting between the Provincial Board and the biggest Municipal board. Agents are chirping that the reality is different. Questions about data validity. Misinformation. Different ‘trusted sources’ having completely different analysis. Where is Al D to lay some knowledge on the plebes? Live in the light. BD4L.
Why are the users on this site so fixated on the people who bought last year??? What about all the people who bought before that? Sorry to the people who bought the top, can’t call it perfectly. If they can sit on paper loses they will eventually be positive in the future.
By ‘the future’, you mean ‘twenty years from now’?
I suppose that IS ‘the future’.
If you think a crash goes straight down and does not have bull runs and dead cat bounces along the way you should really analyze the graphs from the past crashes.
Ok, I will analyze. Oh right, Canadian real estate has been uptrending since data was first collected.
Yeah since 1996……. which was the trough of the last bubble, where prices gave up more than 30% on average and where if you had bought at peak in 1989 you wouldst have been back even in inflation adjusted dollars until 2010……….weird
But you know what! Maybe since we learnt our lesson after the 1989 bust and vowed to never let housing prices get too out of hand again 1996 was a good starting point for data. If only those stupid Americans had followed our lead maybe they could have avoided their 2006 crash, which almost tanked western capitalism and resulted in record low interest rates and money creation.
And in many central and mid-town Toronto neighbourhoods prices fell by close to 50%. And that’s off just the sale price, it doesn’t include any renovation or transfer costs.
Will this site still exist next year? I mean, what happens if your bearish outlook never materializes and Toronto continues to boom like it has?
Love that turds that come to complain don’t realize that this site existed before the market was going up, and reported that the gains were going to go parabolic.
Of course, you probably only became interested in real estate after you bought a shitty condo with a subprime loan. Now you need to cheer on every possible good data point.
… which did t really exist, but I doubt you can read. You understand prices are STILL DOWN, they just fell less than last year, right?
i am hoping the price can decrease further.. my family have bought more than 7 since we came here 20 years ago. real estate should be a long term investment, not some short term flipping. I know people bought 3-4 assignments at once last year, which is insane…
my strategy is, buy one every 3 years and let the rental income catch up.
I really hope this market will boot out people who don’t have the capital but still want to play at the table.
The bearish scenario already played out. There was a large correction, now the market has stabilized as shown by the steady increase in prices.
This should continue with vacancy rates at 1%. People need to live somewhere. It’s common sense, if anyone sells their home (forced seller or not) they still need to live somewhere. Either they pay high rent or they stay out. Sorry, but not everyone is fine just leaving the GTA and moving to a cheaper city.
Vacancy rate only shows you if we have excess supply or not but prices are not defined by the Supply side only, they are defined by Demand side as well.
Imagine that mortgages will not be issued anymore starting tomorrow. Will vacancy rate help to keep prices here when demand disappears?
You can argue about supply side and that’s fine but it’s not a supply side with is changing since 2017, it’s the demand side.
With every interest rate increase, every lending regulation, every downside change in market sentiment demand side is deteriorating.
Sorry, but I don’t deal with hypothetical scenarios, but if you insist. Imagine US citizens get sick and tired of Trump and move to Canada by the millions.
They still have to apply and be accepted. Canada has limitations on immigration, INCLUDING from the US.
Other than LL, the bulls have pretty much been in hiding the last few months. Mmr (now 1986Mr) and SCE pop their heads up occasionally but mostly silent. Knew you guys would be the first to post today. Hey take it guys, sleep easy tonight. Don’t worry about the rate rise next week, don’t worry about NAFTA, don’t worry about the fact that sales for June are below the ten year average, don’t worry about those that bought at record low rates and will soon be renewing higher. Everything is going to be alright! Looks like everyone who doesn’t believe prices can only go up will be renters forever.
Lol at all the bulls out in force desperate to push their narrative. Get out there and make a deal TODAY my friends –why are you wasting precious time on these renter/loser message boards?
The worst part is I don’t think they read the whole thing, or even work in real estate. Prices are down, and even in Toronto it’s down in real terms. Private lenders (a.k.a. subprime lenders) are funding condo closings more than they used to, and developers are giving 3 year 0% private mortgages to close.
Prices are only increasing in the condo segment, which is driven by people that don’t have enough money to get a loan at even a credit union, never mind a Big Six. These are not sophisticated investors that will keep their money.
Oh this bears never give up! How many times we should discuss that? There are 100000 people coming to Toronto every year. They all need to live somewhere! Most of the jobs are in the core or close around. If transportation allows you to get to your work fast then you live in the right area. All this areas around transportation hubs (subway or Go) will always be in demand. Additional quarter percent of the interest rate rise will do nothing. I purchased 2 condos in 2015 in Downtown core and both of them are up $300000 each. Do you really think the prices will go down 50% or so? Common! Look now what happening with steel prices because Trump policy. Also city of Toronto development charges are up every year. Do you really think developers will absorb the cost? It will be passed to end customer. In short houses and for sure condos in Downtown Toronto area and close areas with good transportation will continue to rise. That’s my 2 cents.
Nicely done Gear!. Do you need a mortgage broker. I can help you tap that 300k in equity. Get at least two more 35% (maybe 3) down payments together and I can get you another two-three condos. 3 years from now when you are up 600k on those units we can do this over again. I dont get how the stupid loser renters on this site just dont understand how easy it is to borrow money. Sorry I mean make money
And clearly none of the stupid renters have ever studied migrant flows to Ireland or other western world countries.
Immigration only drops when their housing bubbles exploded and their economies went into recession. Two things that are both impossible for Canada!!!!!
100,000?!!! Based on actual stats, not numbers pulled out of a hat or what uncle Joe said last weekend, Toronto has a population growth of 0.9% – that’s based on numbers before mass emigration out of Toronto started in 2016 but for the sake of simplicity, let’s stick with that number.
That means the population of Toronto is going up only by roughly 25,000 per year. Let’s also assume that the majority of those people aren’t refugees or newcomers to the country and they can ALL afford to buy an average detached home for $1.3M or at the very least an average condo for $600k. That means based on an average household size of 2.2 persons, we would need roughly 11400 housing starts in Toronto annually to keep up with the population growth.
Do you what the annualized rate of housing starts is in Toronto? Around 45,000!!! So where is all this excess supply going?! Hoarders, flippers, Airbnb’ers, etc. with just the flippers (empty homes) holding 8 times per capita more empty homes in Toronto than one of the most desirable RE markets in the world,: London, England.
All these empty homes will hit the market once the myth that “house prices in Toronto will always go up because everyone in the world wants to live here” has been busted. Otherwise, the population growth theory as an explanation of price rises was debunked at least 18 months ago right before the crash. Unfortunately, those who need to believe in unicorns will do that rather than embarking on self-criticism… it’s very much like the stages of grief and T.O. is for the most parts still in denial.
Nice post! lol, thank you for using some logic!
Incorrect! 45,000 is the number of housing starts in GTA not just Toronto. GTA has an annual population growth of 1% on 6.4 million people. That is 64,000 people per year, NOT 25,000.
Also, a lot of housing starts are rebuilds that include tearing down existing dwellings, so you are not accounting for dwellings that need replacement.
The truth is, construction wont be able to keep up with housing demand in the next 10 years. Especially with less youth going into the trades and opting for careers requiring post secondary education.
I’m a custom home builder and have had to turn away clients because I cant find enough workers to start additional projects. I’m building 3 houses right now and can’t take contracts for the next 24 months. We can’t build fast enough to meet demand
Hey 74, I can top you. I bought three condos, two houses, and an entire high rise, and just made ten million dollars.
And then I had to shut the game off, because I had to go to work
Ain’t virtual reality games great?
Maybe you are playing the same one I am.
But, well, occasionally we have to return to the real world.
Oh boy! It’s so funny to see industry people (agents, flippers, developers) coming out en-masse to argue against Economics 101 just because they’re too lazy to look at data points beyond the headlines and will grasp at anything that perpetuates their distorted views of the markets (i.e. that they will always go up!).
But this would also explain why quite a few people I know, leveraged to their necks and without sufficient income to even cover their primary residence and with heavy unrealized losses after poor purchasing decisions last year, bought more properties last month to be able to flip it for some much needed and supposedly easy money!
Prices stabilized in April & May because that’s when your “move-up” crowd, people with kids needing more room make their purchases to be fully settled in before the beginning of the next school year and also be able to take their summer vacations without worrying about finding a home.
Average detached prices in Toronto declined again in June compared to May and even slightly compared to April and will decline through the summer with a slight uptick in September/October. This is called seasonality. They’re down compared to May of last year and flat compared to even May of 2016 once you include inflation. If you include closing and financing costs, the situation is even worse.
The situation is not much different for the 905 area… prices are way below what they were in April of last year, haven’t had any real gains since June 2017 and are at the same levels inflation adjusted that they were in early 2016. The only thing that has been keeping the markets going were condos and that’s the only place some stabilization is now taking place – but not in a good way, as in prices are no longer expected to go up.
But if you want to ignore all the data points and all the economic and geo-political headwinds, the Toornto RE is doing fantastic and should be shooting up another 30% in the next year. I used shooting up because that’s what you got to be doing to actually come to that conclusion in lieu of all the FACTS! 😉
So I heard I should HODL.
Jk, but are you saying that the best investment advice isn’t from someone in the comment section of website, telling you to buy an asset that just appreciated by 30% from last year? lol.
Buy a home if you want a home, sure. Appreciation isn’t that important to a lot of people. Buy a home because you think you’ll make money, so you take out a mortgage at 12% from a private lender (like a good portion of condo investors), you’re fucked.
It’s nice to know some of the smart people stuck around.
“Buy a home if you want a home, sure. Appreciation isn’t that important to a lot of people”
That’s not fine at all because even for your principal residence you should not overstretch financially and the problem is that now people can’t enter the market without overstretching themselves financially.
Even if they have no intention to speculate they will quickly go underwater when recession hits and same recession may also take their job making them insolvent.
It’s a risky time now, end of the credit cycle so if you really want to enter the market and don’t care about appreciation you should be planning for 5% mortgage rate and 30-50% drop in property value and be financially OK in this situation.
If you can’t afford that and still decide to jump into the market – don’t blame anyone later if you buy your house at peak and become insolvent because of recession. You were warned.
I might have missed it because I find I dont even read most of the comments anymore..see a name, and scroll on past, but given the fact that we know mortgage growth is stalling in the banks, yet sales are still happening, how many sales of last month were from a private lender or sub-prime mortgage lender?
And at what intetest rate???
The latest data puts private mortgage lending at 8% in the GTA – not an insignificant portion by any means:
As far as I know, rates are typically between 7-12% depending on whether it’s 1st or 2nd mortgage, amount of down-payment, etc.
I am a private lender and would be happy to help anyone that needs a second mortgage or loan.
Rates will vary but firsts are around 7%.
Seconds start at 9.99% w 2% lender fee.
3-24 month terms available.
Mind if I ask how do you fund your business?
Todays’s WSJ: The Fed raised its benchmark federal-funds rate at the June meeting by a quarter percentage point to a range between 1.75% and 2%, the second such increase this year. Most of the officials penciled in a total of at least four rate increases this year, up from three in forecasts released in March.
The sales-to-new-listings graph now has some meat to it. June figures were down, not up. from May, indicating that things did not just get pushed from one month to the next. May truly WAS the peak. But look at the shape of the sales graph. It looks like someone just cut off the spring peak. Flattened it.
What is really interesting is that last year there was a minimal ‘Sept. hump’ in sales to match the Sept. hump in listings. Sept. sales were flat into the late fall.
It is beginning to look like the entire year is going to be a truncated peak, flat from one end to the other.
So the next bookmark will be what happens in September of this year. If there is no ‘Sept. hump’ again, but the sales graph remains flat through the summer into the fall, it will be a clear indicator that things have markedly changed, and that past trends are no longer reliable indicators.
If this happens, then any increase in July will just be ‘infill’ – a smoothing and leveling of the bumps and troughs into one flat line.
It really brings into question to what degree ‘seasonally adjusted’ figures are giving an accurate picture, if seasonal trends are no longer holding.
Irrational markets contract similar to how they expanded; irrationally. Pricing is getting messy. Brampton margin call is in full effect. Shit be cray cray. Seasonality adjustments, when reading data, are really ways to explain variance and avoid overreaction to data points. It’s like looking at the $ and not the percentage when assessing returns; who cares that you made a $1000 in a year if the yield was 1% and then neg once inflation adjusted! Millenials/FOMO/herd are always focusing on the number that doesn’t matter (NOTtaking a swipe btw). Honestly, since May I’ve stopped caring about how we’re contracting; pop here, condos still hot, whatever…it doesn’t change the reality of the situation.
While I agree Sept will be important for trending and historical comparison, assuming Poloz stays the course (and barring a nuclear war, he has to stay the course), I think mid-Oct-to-end of November will be the true test as we head into the winter as recessionary indicators will be blazing (or should be) in the media with slow downs starting (in fact, US manufacturing is having issues, transport too, did CAT just downgrade earnings? I don’t recall).
Will people start to freak out knowing they will NOT be able to sell for higher in the spring?
The wheels could be off by then, especially if there is a march rate increase…I’m agreeing with you but my focus is more macro and less trying to understand why the last 3 years were so fucked up. BD4L.
Take a closer look at the curve for sales (not listings) for this year. It is not a smaller version of the typical curve, it is as if someone took shears and cut the peak off completely. It is flat.
Now go beyond monthly statistics, and look at the curve in general. Consider the area under the entire curve, which would represent cumulative sales. If this curve stays flat for the year there is an entire CHUNK missing. Almost an entire SEASON of sales. The only sales are ‘maintenance’ sales – not people moving up, but people moving into the city and people selling for economic reasons. Non-discretionary sales, that are at a constant level throughout the year, no seasonal swings (except for the December-January doldrums period). The optional or discretionary sales – the ‘hump’ or ‘peak’ curve in May-June and Sept-Oct- are completely missing, since fall of last year..
That is, split the curve into two parts or areas, the bottom and the top. in the previous years, there is a ‘rectangle’ of sales that is relatively stable, the bottom part of the curve, and ‘peaks’ that are built on this ‘foundation’. The rectangular foundation part of the curve is still there, but not the variable or peak curve.
There’s of course a 90%+ chance that we will have the typical fall “hump” this year as well. Having said that, I think the important issue is how big is that hump compared to the drop we will see in the next 2-3 months.
In the absence of a crystal ball and based on what we have seen since last April, it looks like this is going to be like any other major correction in any other market, meaning we’re not going to see a straight line down but lower peaks and lower lows until we reach the bottom.
I mostly base on my analysis on detached homes and mainly in the 416 area since that’s where property values are best preserved (i.e. you don’t run the danger of overstating the correction and if anything your analysis will be on the conservative side). I also believe that the condo market has benefited from a short term surge compliments of a demographic shift (i.e. baby-boomers cashing in and downsizing). So it’s best to leave that segment of the market out of the analysis for the next few months.
If you look at the average prices of detached homes in the 416 area, we hit a low in August 2017 followed by a dead-cat bounce in September and a gradual decrease and then increase in prices to May 2018 where we hit a peak roughly 10% below the April 2017 all-time peak. In June, we already dropped 5% below that peak in a single month – yes, I don’t know why all the headlines were positive! 😉
If in the next 2-3 months average prices drop below the August 2017 low (which is coincidentally, or not, very close to some previous points of resistance in March and summer of 2016) we’re obviously setting new lower lows and even in the absence of any economic shocks or geo-political risks, this correction is nowhere near done.
If we don’t hit new lows in the next 2-3 months, then we can assume that the market has somewhat stabilized for now but again, that doesn’t negate or dismiss any of the headwinds that could potentially be out there with auto-tariffs being the biggest risk to Ontario’s economy at the moment.
BTW, active listing in the GTA are 67% higher than the average of 2016 and 2017 and not even 1% below their peak since at least September 2015, so I really don’t understand the positive headlines here.
Since the fall of last year, there HAVE been no peaks and valleys, the graph is flat except for the dec-jan doldrums. It is not as if the peaks are lower, they don’t exist.