December was a quiet month in the Toronto real estate market. TREB reports just 3,781 sales for the month, down 22.5% from the 4,876 reported in December, 2017. For reference, there were 5,338 sales in December, 2016, and 4,917 in December, 2015, so sales last month were well below what we have seen in recent years. The average sale price for the month was $750,180, up 2.1% from $734,847 in December, 2017.
TREB also released the annual stats, which deserve some comment. In comparing 2018 to 2017, it appears that the market is ‘down’ year-over-year. But, while the average sale price for the whole year declined 4.3% (for the whole of the GTA), that’s not because the market is trending downwards. Rather, it is because of the massive price spike that occurred in the first quarter of 2017, when prices surged roughly 30%, only to drop right back down to almost exactly the pre-spike level by mid-year. When those super-high sales are averaged over the whole year, they obviously draw up the average.
A more helpful approach is to look at what happened *within* 2018. The average sale price in January, 2018 was $736,783. By June it was up to $807,871, and then down to $750,180 by the end of the year. (That pattern is fairly normal: in January, 2017 the average sale price was $768,351; by June it was up to $791,929 and then down to $734,847 by December. This is generally due to the seasonal cycles of the real estate market.) So, while the market was definitely flat (which has its pros and cons…), it was not ‘down’.
By the way, if we back a little further, we see that while the market was at $730,472 in December, 2016, meaning we are up just about 2.7% in the last two years, the average price a year earlier was just $608,714, meaning we are still up 20% over the last three years. Clearly, 2017 and 2018 were unusual, but the longer-term trend is still strongly positive.
Part of the reason for the on-going strength of the Toronto (i.e. 416, excluding the 905) market is demand for condos. Although sales volume in that segment was down 23.9% from December 2017, the average sale price was up 11.4%, which is a significant amount. In fact, the only segment that saw a decline last month was fully detached homes, which has been a recurring theme this year. It looks like buyers have easily made the shift away from the most expensive home type, and found options among semi-detached, townhouses and condos.
There were just 4,308 new listings last month, a decline of 31.5% year-over-year, and just 11,431 listing on the market at the end of the month, down 11.6%. I think that we’ll continue to struggle with that kind of low supply in 2019. We can certainly expect that this month we’ll see a fair few listings that were taken off MLS in December come back onto the market, but it’s too soon to tell if we’ll get the kind of supply that we used to get. Either way, it’s usually a couple of months into the New Year before the listings start to tick up for the spring market.
Also, the Bank of Canada decided this week to keep rates steady for now, and that’s probably a good thing for the economy (which has some issues) and the real estate market. Unless (and/or until…) something external happens, the Toronto real estate market should keep humming along this year. With price increases at the low end of what we have seen in the last 15 years or so, buyers should be able to meet their needs; and with continuing demand, sellers will be able to sell. Overall, that’s what a balanced market looks like. 🙂