The most obvious aspect of the September market was the drop in sales volume. Transactions were down 35.1%, from 9,830 last year to just 6,379 this year. At the same time, the number of active listings surged from 11,255 to 19,021, an increase of 69%. This is, broadly speaking, good for the market. For perspective, there were 21,571 active listings in September ’07, and that was down from 26,363 the previous year; the current number is below historic levels. However, it does make for some stark-looking numbers. Still, the average price did manage to eek up 2.6% year-over-year. That means that, despite the wild roller coaster ride that the market experienced in the first half of the year, we are still in positive territory over-all.
The average sale price for the month was $775,546, well down from the fever-pitched levels that we saw in the first quarter of 2017. I don’t usually track same-year stats, but with the way things have gone in 2017, I think it’s warranted. Average price hit a peak of $920,791 in April, and had trended downwards every month since then, quickly giving up the rapid gains seen in the first few months. The August average was $732,292, so September at least showed its usual strength relative to the summer months.
When discussing the condo market, I always make a point of focusing on sales in the 416 area code (separate from sales in the 905). This month, it’s interesting to note the difference in prices for detached homes in the 416. Last month, the average sale price in Toronto was $1,355,234, up significantly from the $1,191,052 average we saw in August. That indicates a strong market, despite the news. In the 905, the August average was $906,592 and rose just slightly to $912,921 in September. Clearly, the decline in the overall average sale price isn’t because of lower prices for detached homes. As TREB noted in its report, “the MLS® Home Price Index (HPI) composite benchmark was up by 12.2 per cent on a year-over-year basis”, which indicates that the ‘decline’ in prices is more due to the mix of home types sold, which is a healthy reaction by the marketplace.
The condo segment was also interesting. Sales in the 416 volume was down 23.2%, but the average sale price was up 24%, to $554,069. Condos seem to have been acting as a ‘relief valve’ for people finding themselves priced out of low-rise dwellings, and the price gap is narrowing in reaction to that….
So, what does it all mean? Who knows! The real estate market has been under constant pressure from the government for a few years now (several rounds of tightened mortgage rules, with more to come; new taxes; enhanced rent controls, etc.) so it’s hard to tease out what’s actually going on. The ‘fundamentals’ are still in favour of a strong, growing market: decent economy, some job creation, historically low interest rates and a growing population. But, with so much meddling by governments, and the natural confusion that causes, the behaviour of the market is not a reflection of fundamentals. It’s probably safe to say that the fundamentals will eventually show through – meaning a resumption of solid price increases – but we may have to wait for the meddling to recede before we see that…. In the meantime, the market is surviving! 😉