Toronto Market: Steady As She Goes

Following multiple disturbances overt the past year, including the ‘Fair Housing Plan’; tighter mortgage lending rules; and recent mortgage rate increases, the Toronto market has remained remarkably steady since last summer. Following the inflation and deflation of a price bubble through late 2016 and early 2017, prices have evened out and appear to be returning to a more normal, predictable seasonal pattern.

Average selling prices across the GTA were up very slightly (less than 1%) from December to January. This is consistent with the seasonal pattern each year for the past decade; January prices have sometimes been higher than December and sometimes lower, but the difference has always been small, averaging less than 1%. This suggests that we will have a ‘typical’ year in 2018: a strong spring market, with prices increasing from February through June; a quiet summer with prices declining in June and July; and a strong fall market with prices increasing from September through November. All totally consistent with past years — with the notable exception of the ‘bubble years’ 2016 and 2017, when pretty much everything was atypical.

Much has been made in recent media reports about how Toronto area sales (number of properties sold) are down 22% since last January. While this is true, it needs to be put in perspective, again because of the distortion caused by last year’s bubble. Sales in January 2017 were an all-time high, and were about 16% higher than the average January sales over the past decade. January 2018 sales were lower than this average, but only by 10%. Comparisons to a distorted benchmark can be misleading.

Prices All Property Types Jan 2018 Snagit

 

 

As we saw last fall, inventory levels increased over the course of the year from the insanely low levels in 2016 and 2017, and have remained in roughly ‘balanced market’ territory (neither a strong buyers’ market nor a strong sellers’ market) since last summer. This bodes well for the coming months – buyers should have more choice and face fewer bidding wars than in past years. All in all, a very healthy market if the trend continues.

Inventory Jan 2018

Another trend that is continuing is the discrepancy between condo sales and freehold (detached/semi-detached) sales. When the bubble deflated last year, prices fell very steeply for freehold properties but very little for condos, and this difference has held up since then. Condo prices will likely increase more quickly this year than freehold prices; we are already seeing a lot of condo bidding wars, especially in the lower price ranges.

Prices Freehold Jan 2018

 

Prices Condos Jan 2018