The Dog Days Of Summer Are Upon Us

The summer heat wave in Toronto has brought with it the typical slowdown in the real estate market. Prices and sales in July were lower than in June (as they are every year), though higher than last June. This probably sounds very confusing; the chart below should help to clarify what is going on.

As the chart makes abundantly clear, last year was an extreme aberration, completely out of line with the trend over the previous 10-15 years. A large price and sales bubble inflated rapidly last spring and then deflated just as quickly when the Ontario government stepped in with their 16 point ‘Fair Housing Plan’ aimed deliberately (and successfully) at bringing house prices down. Prices stabilized late last year and recovered strongly this year, to the point where we have returned to the typical seasonal price pattern, and have crossed above last year’s declining trend line. Thus, even though July prices fell as compared with June, they fell less than they did last year at this time.

If the past is any guide, we can expect to see flat or slightly lower prices and sales in August, and then a rebound in the fall, perhaps testing this spring’s highs.

The divergence between condo and freehold prices, driven by shrinking affordability, continues unabated. Condo prices also fell in July versus June, following the seasonal pattern, but still remained above the ‘bubble high’ reached last spring. The Toronto area condo market is nothing if not robust. Freehold prices crossed above 2017 for the first time, though just barely.

Overall, the Toronto area market is nicely balanced, with the inventory of homes for sale approaching three months’ supply, where our rule of thumb says that we have neither a buyers’ market nor a sellers’ market. We would hope that this happy state of affairs continues for a while; surely we’ve had enough of wild swings and crazy bidding wars.