The Fall Market Has Arrived

Overall, the Toronto area market continues to follow the trend established early this year, a trend very similar to what we saw for more than 15 consecutive years before last years ‘bubble and burst’: slower in December/January and July/August, and strong from February through June and from September through November. Right on cue, September average prices increased by 4% from the August low, and were 3% higher than last September.

If we look a bit deeper into the numbers, however, some signs are beginning to emerge suggesting that the market is getting a bit tattered around the edges. For example, while the condo market continues to soar, with September average prices 10% higher than last September and 5% above last year’s ‘bubble peak’ in April, freehold prices have been dead even with 2017 prices for the last three months in a row. Clearly this expanding divergence is due to the change in mortgage qualification rules that came into effect in January of this year, together with steady increases in mortgage interest rates.

Inventory levels are also continuing to creep up, though this is mostly outside the City of Toronto, particularly areas north of Toronto.

For many years from the late 1990’s until 2015, the market was highly predictable: each year was a virtual carbon copy of the previous year, with prices shifted up by 6-8% each year. Since late 2016, however, when the bubble started to build, the direction of the market has become much more uncertain. It seems likely that the market will remain healthy for the next couple of months — but after that, all bets are off.