The Toronto Real Estate Board (TREB) released its February Stats on March 6, announcing that Greater Toronto Area REALTORS® reported 5175 residential transactions through TREB’s MLS® System in February 2018. This result was down by 34.9% compared to a record 7,955 sales reported in February, 2017. The overall selling price fell by 12.4% year-over-year to $767,818 from $876,336. But remember, prices spiked in the first quarter of 2017. If you put that aside and compare this result to February 2016, you will note that prices in February 2018 remained 12% higher than the average reported for February 2016, and that represents an annualized increase which is well above the inflation rate for the past 2 years.
Active listings increased by 147.4%, from 5,400 a year earlier to 13,362 in February 2018, accounting for an increase in inventory levels to roughly 2.6 months of supply in 2018, from the unhealthy 0.7 ratio seen last February.
Last month I presented some charts showing what was going on in the market on a micro basis, compared to the past 5 years. This month, I’m digging deeper, going back 10 years, but on a more macro level. The solid horizontal line in each of the following charts shows the 10-year average value for the metric being measured. And, except unit sales for the month of February 2018, which were off significantly from their 10-year average, the charts present a pretty clear picture that February 2018 produced results that were very close to historical averages for that month.
In fact, average overall prices in February, 2018 were just slightly off their 10-year trend average growth rate (green line below), mostly because the abnormally high run-up in prices in 2017 that was caused by demand-supply imbalances, (particularly in single family detached homes) pushed the trend line upwards. Another interesting observation is that although February 2018 prices on average were down by 12.4% when compared to February 2017, condominium prices (the blue column in the chart below) continued their upward trend, increasing by another 10.1% over their February 2017 record level. And condominium prices are now trending above their 10-year average growth (blue line below).
This next chart shows that the market is a more balanced one in February 2018 than it was in either February 2016 (when inventory of homes for sale was extremely low at just over 1.5 months of supply) or February 2017 (when inventory was almost non-existent). Inventory compared favourably in February 2018, at 2.6 MOI, to the historical average of 2.4 months of supply.
Lastly, a comment on interest rates – the Bank of Canada decided not to increase its benchmark interest rate this month from its current level of 1.25%, adopting a cautiously negative tone about the growing uncertainty for the global and Canadian outlooks as a result of the U.S. trade policy which is edging towards more protectionism and higher tariffs. Home buyers can breathe a sigh of relief (however brief) that interest rates will likely remain at their current levels for at least another quarter.
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