Toronto and GTA Markets in December 2019
This is the recently released report of the Toronto Real Estate Board concerning the December 2019 results:
“GTA REALTORS® Release December & Annual 2019 Stats TORONTO, January 7, 2020 –
Toronto Real Estate Board President Michael Collins reported that December 2019 residential sales reported through TREB’s MLS® System by Greater Toronto Area REALTORS® were up by 17.4 per cent year-over-year to 4,399.
Total sales for calendar year 2019 amounted to 87,825 – up by 12.6 per cent compared to the decade low 78,015 sales reported in 2018.
On an annual basis, 2019 sales were in line with the median annual sales result for the past decade.
“We certainly saw a recovery in sales activity in 2019, particularly in the second half of the year. As anticipated, many home buyers who were initially on the sidelines moved back into the market place starting in the spring. Buyer confidence was buoyed by a strong regional economy and declining contract mortgage rates over the course of the year,”
said Mr. Collins.
While sales were up in 2019, the number of new listings entered into TREB’s MLS® System was down by 2.4 per cent year-over-year. For the past decade, annual new listings have been largely in a holding pattern between 150,000 and 160,000, despite the upward trend in home prices over the same period.
“Over the last ten years, TREB has been drawing attention to the housing supply issue in the GTA. Increasingly, policy makers, research groups of varying scope and other interested parties have acknowledged that the lack of a diverse supply of ownership and rental housing continues to hamper housing affordability in the GTA. Taking 2019 as an example, we experienced a strong sales increase up against a decline in supply. Tighter market conditions translated into accelerating price growth. Expect further acceleration in 2020 if there is no relief on the supply front,”
said Jason Mercer, TREB’s Chief Market Analyst.
The MLS® Home Price Index Composite Benchmark was up by 7.3 per cent on a year-over-year basis in December 2019. From June 2019 onward, the annual growth rate in the MLS® HPI Composite Benchmark accelerated. The average selling price in December 2019 was $837,788 – up almost 12 per cent year-over-year.
For calendar year 2019, the average selling price was $819,319 – up by four per cent compared to $787,856 in 2018.”
REVIEW
Here are the average sale prices as reported by TREB for single family homes of all types in the GTA, including houses, townhouses and apartments starting at the beginning of 2018 until now:
Average Prices Month
2018
$734,837 January 1st
$735,874 January 31st
$767,801 February
$784,514 March
$804,926 April
$803,440 May
$808,066 June
$781,918 July
$765,252 August
$796,814 September
$807,538 October
$787,741 November
$749,019 December
2019
$749,019 January 1st
$747,175 January 31st
$779,791 February
$788,133 March
$820,569 April
$838,248 May
$831,784 June
$806,953 July
$792,111 August
$842,642 September
$851,917 October
$843,640 November
$837,788 December
For those following these numbers on a monthly basis, please note that some of the recent sales numbers in 2019 have had to be restated. A few transactions may have fallen through and not closed as originally scheduled. Consequently, TREB deletes them and re-enters them in the proper month. That will throw the average prices off by a few hundred dollars if you are looking back at previous monthly reports. Changes are more likely for the most recent months.
The first observation is that the average price at $851,917 reached on 31 October was the highest number in 2019. Traditionally, the high price point annually is achieved in May. September also exceeded May. This was a demonstration of “pent-up” demand. That trend is likely to continue into 2020.
Let’s do a quick analysis. 2019 started with $749,019 and we are now at $837,788, that’s an increase of $88,769 which is an 11.85% increase over the twelve (12) month period.
Let’s go back two years. 2018 started with $734,837 and we are now at $837,788 that’s an increase of $102,951 which is a 14.01% increase over the twenty four (24) month period. Expressed over 12 months, that’s a 7.01% annualized increase.
Let’s also go back to 2017 which was the year with the peak of the market and the sudden drop. 2017 started with $730,472 and we are now at $837,788 that’s an increase of $107,316 which is a 14.69% increase over the thirty six (36) month period. Expressed over 12 months, that’s a 4.89% annual increase.
So, what’s the percentage rate of increase?
From 2017 4.89% calculated
From 2018 7.01% calculated
From 2019 11.85% calculated
The most accurate number here is the 4.89 % annual increase from the beginning of 2017. It’s the longest time period, and is therefore the most steady and accurate. Historically, over one thousand years of history we have seen increases of over 5% per annum. So, this is certainly not new!
The market peaked in the early Spring of 2017, so this figure takes into account both the rise and fall in 2017. This is the market performance since the beginning of 2017.
Naturally, it takes out the Spring peak in 2017. If you did business right at that time, it was unfortunate if you were a Buyer, great if you were a Seller, provided of course that your deal actually closed.
For curiosity sake, the peak was April 2017 at $919,614. The drop to today at $837,788, is $81,826 which is an 8.90% decrease.
The numbers to avoid are the very short term numbers. So, that would be what’s happening right now in January 2020.
Volume of Sales
Month 2019 2018 Trend
January 3,968 3,987 down
February 4,982 5,148 down
March 7,132 7,188 down
April 9,006 7,742 up
May 9,951 8,402 up
June 8,825 8,024 up
July 8,556 6,916 up
August 7,794 6,797 up
September 7,806 6,414 up
October 8,460 7,448 up
November 7,071 6,206 up
December 4,399 3,746 up
Total 87,825 76,915 up
Last year the total sales for 2019 was 87,825 and in 2018 ir was 76,915 or 8, 10,910 more transactions representing a 14.18% increase.
This trend will put the pressure on prices. Buyers have obviously chosen to enter the market rather than continue to sit on the sidelines. The stress test imposed in 2017 has been alleviated somewhat, meaning that more prospective buyers will qualify for more money, meaning they can now spend more on housing.
More transactions without a corresponding increase in Listings will continue to place an upward pressure on prices.
COMMENT
This looks like an attractive and balanced market for both Buyers and Sellers.
If you would like to discuss the market, please give me a call.
Brian Madigan LL.B., Broker
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