Actually, that’s an interesting question. Let’s first have a look at the report just published by the Toronto Real Estate Board (TREB):
GTA Home Prices Up in July
TORONTO, August 3, 2012 – Greater Toronto REALTORS® reported 7,570 sales in July 2012, representing a decline of 1.5 per cent compared to 7,683 sales reported in July 2011. The decline was most pronounced in the condominium apartment segment in the City of Toronto. Total sales in the rest of the Greater Toronto Area (GTA) were up compared to the same period last year.
“Very strong annual sales growth in the first half of 2012 and an earlier peak in sales this spring compared to 2011 help explain more moderate sales this summer. New mortgage lending guidelines and the additional upfront cost of the City of Toronto land transfer tax also prompted some households to put their buying decision on hold,” said Toronto Real Estate Board (TREB) President Ann Hannah.
The average selling price in July 2012 was $476,947 – up by four per cent compared to July 2011. The MLS® Home Price Index (MLS® HPI)* composite index, which allows for an apples-to-apples comparison of benchmark home prices from one year to the next, was up by 7.1 per cent year-over-year.
“The GTA housing market became better-supplied in recent months. Buyers benefitted from more choice in the market place, resulting in less upward pressure on the average home price in July,” said Jason Mercer, TREB’s Senior Manager of Market Analysis.
“The mix of homes sold in July 2012 versus July 2011 also appears to have changed, further influencing the average selling price. This is evidenced by the different annual rates of growth between the overall average price and the MLS HPI®,” continued Mercer.
Well, it certainly seems pretty clear from the headline that the market was up. And, TREB goes on to point out that it compared July 2012 to July 2011. When you do the calculations, that works out to a 7.1% increase, year over year.
But, have a look at the monthly numbers. The average price for a single family home in the GTA was $516,359 in April 2012. In fact, the decline since April has been 7.63%. May, June and July all reflect a steady decline.
We could have used another headline that said: “GTA Home Prices Drop 7.63%”. But, nobody wants to read that.
So, is that something to worry about?
Let’s add a little more perspective to this. Last year the market peaked in May at $485,362 and dropped to $450,694 in August. That was a 7.14% decline over that time period.
This year the market peaked one month earlier. Is this just a cyclical trend or does it reflect something in the underlying economy? Actually, that type of decline is commonplace over the last decade.
Could we have a headline that just read: “GTA Prices Fairly Stable”. We probably could, but that doesn’t seem very exciting, and we would soon be fired from the editor’s desk.
However, let’s have a look at some numbers over the last two years:
April 2011 ~ $476,802
November 2011 ~ $477,573
July 2012 ~ $476,947
That looks fairly stable to me. We roughly have the same price now as we had last Spring
It’s always interesting to look at the numbers behind the headlines. Which headline did you like?
Brian Madigan LL.B., Broker is a Manager at RE/MAX West Realty Inc., Brokerage, 416-745-2300.