Toronto Market Recovered from 2008 Stock Market Crash

By
Commercial Real Estate Agent with RE/MAX West Realty Inc., Brokerage (Toronto)

Toronto Real Estate Market Largely Unaffected by October 2008 Stock Market Crash

You might recall that there was a major stock market crash in October 2008. It wiped out Lehman Brothers, Goldman and Sachs and led to the bailouts of the auto industry, with Chrysler filing for bankruptcy on 30 April 2009 and GM filing for bankruptcy on 30 June 2009.

The stock market appeared to peaked in April 2007 and softened after that until the actual crash in October. Nine months later following the GM bankruptcy on June 2009, did we actually see the beginning of the financial recovery.

So, how did the Toronto stock market do over that time period?

These are the average selling prices are reported by the Toronto Real Estate Board for a single family home in the GTA. This includes detached, townhouses and condominium apartments. The ORES INDEX was developed in 2005. It marks the January 2005 price as 100, and relates all other prices subsequently to that base.

 

2007

         

Month

Average Price

Number of Sales

Monthly Percent Change

Index

January

353,724

5,173

 

5.20705378

109.46428958

February

368,687

6,772

 

4.23013423

114.09477596

March

365,285

8,518

 

-0.92273392

113.04198477

April

379,025

9,452

 

3.76144654

117.29399860

May

382,787

11,146

 

0.99254667

118.45819627

June

381,963

10,451

 

-0.21526332

118.20319922

July

366,012

8,912

 

-4.17605894

113.26696396

August

361,890

8,059

 

-1.12619258

111.99135981

September

380,132

6,866

 

5.04075824

117.63657351

October

394,646

7,915

 

3.81814738

122.12811126

November

393,747

7,313

 

-0.22779909

121.84990453

December

376,236

4,646

 

-4.44727198

116.43090787

 

2008

         

Month

Average Price

Number of Sales

Monthly Percent Change

Index

January

374,449

5,075

 

-0.47496784

115.87789850

February

382,048

6,015

 

2.02938184

118.22950353

March

380,338

6,631

 

-0.44758774

117.70032277

April

398,687

8,762

 

4.82439304

123.37864895

May

398,148

9,411

 

-0.13519377

123.21184870

June

395,866

8,600

 

-0.57315370

122.50565543

July

371,427

7,806

 

-6.17355368

114.94270303

August

364,886

6,318

 

-1.76104591

112.91850926

September

368,549

6,424

 

1.00387518

114.05207015

October

352,974

5,155

 

-4.22603236

109.23219276

November

368,582

3,640

 

4.42185543

114.06228241

December

361,415

2,577

 

-1.94447911

111.84436515

 

 

2009

         

Month

Average Price

Number of Sales

 

Monthly Percent Change

Index

January

343,632

2,670

 

-4.92038239

106.34119471

February

361,305

4,120

 

5.14300182

111.81032429

March

362,052

6,171

 

0.20675053

112.04149272

April

385,641

8,107

 

6.51536243

119.34140205

May

395,609

9,589

 

2.58478741

122.42612358

June

403,972

10,955

 

2.11395595

125.01415791

July

395,414

9,967

 

-2.11846366

122.36577841

August

387,921

8,035

 

-1.89497590

120.04697640

September

406,877

8,196

 

4.88656195

125.91314627

October

423,559

8,476

 

4.10001057

131.07559858

November

418,460

7,446

 

-1.20384645

129.49764963

December

411,931

5,541

 

-1.56024471

127.47716941

 

The market started off at 109 in January 2007. It was back to 109 in October 2008. That’s a flat market for 21 months. Basically, it started to rise after that.

The lowest point in that period of economic turmoil was January 2009 where the index stood at 106. Some might use that as a starting point for recovery, that is, 3 months after the stock market crash in October 2008.

The highpoint in 2007 was 123 which was reached in April. In 2009, that point was reached in June, that’s 8 months after the crash or 5 months after the lowpoint.

SARS had no effect on the Toronto market.

The 2007-2008 financial crisis took 5 months, 8 months or 14 months to recover, depending on your measurement dates:

  •         5 months - January 2009 lowpoint  to June 2009 (back to normal pricing)
  •         8 months – October 2009 stock market crash to June 2009
  •         14 months – April 2008 highpoint to June 2009

 

The government intervention in 2017 took 22 months for recovery.

So, the question is “how long will COVID-19 take?

Brian Madigan LL.B., Broker

www.iSourceRealEstate.com

 

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