Average Selling Price for Homes in the GTA up 9.2% Year to Date, OR
Average Selling Price for Homes in the GTA down 12.4% in April Year-Over-Year?
Well, both are true actually. But which one is more relevant?
I believe the first headline is more relevant, because it tells us what is happening in the current real estate market. We already know that the GTA real estate market reset from its historical highs (in April, 2017 the GTA recorded the highest ever average selling price) after the introduction last year of the foreign buyers tax in Q2, followed by the more restrictive mortgage qualification rules introduced at the beginning of 2018. Add to those measures the 2 successive increases in interest rates by the Bank of Canada and the market cooled down considerably.
Headlines are meant to grab the reader’s attention. And one could argue that negative headlines tend to attract more attention than positive ones. But the facts are that the GTA real estate market is trending positive, despite being off its historical highs. Take a look at these statistics for the first 4 months of 2018:
Unit Sales and Active Listings have increased in each month. Average selling price is up 9.2% in four months. Days on the Market have gone down by more than a third, and Average Selling Price to List Price is stable. These are all signs of a healthy real estate market.
But the GTA real estate market is really a tale of 2 cities. As reported by TREB in their latest Market Watch:
“The year-over-year change in the overall average selling price has been impacted by both changes in market conditions as well as changes in the type and price point of homes being purchased. This is especially clear at the higher end of the market. Detached home sales for $2 million or more accounted for 5.5% of total detached sales in April 2018, versus 10 per cent in April 2017.”
The differences in the composition of the current GTA real estate market can seen by looking at the following statistics broken down by major home type:
There is roughly a 3 month supply of detached homes for sale in the GTA, whereas there is only a 1 ½ month supply of condominium units for sale. As well, the increase in Average Selling Price for Condominiums, at 10.2% for the first four months of 2018, is outpacing the rate of increase for Detached homes, at 6.1%, as there is obvious pressure at the lower end with Condominiums in short supply. TREB expects that “once we are past the current policy-based volatility, home owners should expect to see the resumption of a moderate and sustained pace of price growth in line with a strong local economy and steady population growth”.
If you would like to find out what these statistics mean to you, or if you are curious to know how much your property is worth today or how much you can afford to buy, please reach out.
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