IT LOOKS LIKE THE WORST IS OVER FOR THE TORONTO HOUSING CORRECTION
Last month I spoke about how the Greater Toronto Area Real Estate Market is beginning to change shape and return to balance. Well, the evidence is in, as the number of new listings entered into The Toronto Real Estate Board’s MLS® System amounted to 16,469 in September – up by 9.4 per cent year-over-year. But the real story is that total active listings stood at 19,021, a whopping 69% increase year-over-year. TREB suggests that the improvement in listings in September compared to a year earlier is a sign that home owners are anticipating an uptick in sales activity as we move through the fall, or put another way, more inventory is starting to attract more buyers back to the market.
TREB announced that Greater Toronto Area REALTORS® reported 6,379 sales through TREB’s MLS® System in September, roughly the same amount as in August, but 35 per cent lower than September of last year. In a balanced market, buyers take longer to make up their minds, as there is more product available to choose from. Likewise, sellers need time to get adjusted to the new market reality. Remember, the last few years were anything but “ordinary”.
Think of it this way. Last year at this time, inventory (the number of active listings on MLS®) stood at approximately one month of sales. So, on average, every home on the market was selling within a month or less, with multiple offers driving up the price paid due to the scarcity of supply. Now that inventory is closer to 3 months supply, what this means is that 1 out of every 3 houses on average is selling within the month, and price is no longer being dictated by the frenzy we saw when homes were in such short supply. So it makes sense to see that sales are about a third lower in September 2017 than they were in September of last year. All of this is happening against a backdrop where average prices are still increasing, albeit at a lower rate than we saw during the run up. The average selling price of a home in the GTA in September 2017 was $775,546 – up 2.6 per cent compared to September 2016.
However, the exception continues to be the condominium apartment market segment, where average prices were up on average by 23 per cent compared to last year. TREB reported in September that “tighter market conditions for condominium apartments follows consumer polling results from the spring that pointed toward a shift to condos in terms of buyer intentions”. In fact, condos accounted for almost 30 per cent of all MLS home sales across the GTA during the month of September, whereas detached homes – the most expensive market segment on average - accounted for a smaller share of overall transactions this year compared to last.
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