Toronto Market stabilizes in October
So, what’s happening with the Toronto market?
First, let’s look to see what the Toronto Real Estate Board says in its Marketwatch:
Average Price Up in October, Despite Fewer Sales
TORONTO, November 3, 2012 –
Greater Toronto Area REALTORS® reported 6,896 transactions through the Toronto MLS system in October 2012 – a decrease of 7.1 per cent compared to October 2011. There were two more business days in October 2012 versus October 2011. On a per business day basis, transactions were down by 15.6 per cent.*
"Sales have decreased in the second half of this year compared to 2011, especially since the onset of stricter mortgage lending guidelines at the beginning of July. The prospect of higher monthly mortgage payments due to the reduced maximum amortization period has prompted some households to delay their home purchase," said Toronto Real Estate Board (TREB) President Ann Hannah.
The average selling price for October transactions was $503,479 – up 6.2 per cent compared to October 2011. The MLS® Home Price Index composite benchmark price, which allows for an apples-to-apples comparison in terms of home attributes, was up by 5.1 per cent.
"We continue to see price increases well above the rate of inflation. Active listings have remained low from a historic perspective, so substantial competition between buyers still exists, especially for low-rise homes," said Jason Mercer, TREB’s Senior Manager of Market Analysis.
"It should be noted, however, that the annual rate of price increase has been edging lower over the past few months as the market has gradually become better supplied," continued Mercer.
As you know by now, TREB reports its statistics year to year. So, generally prices ought to be favourable. In the September 2011 to September 2012 comparison, the increase was 6.2%. But, more importantly the short term direction was flat. The average price was just $ 416.00 higher in October than it was in September. Statistically, that’s insignificant. Since we often see large gains in October, the fact that we are seeing very stable pricing is noteworthy. The height of the market this year was April. At that time, the average price was $ 515,869.00 but by October that had dropped to $ 503,479.00 which is a 2.4% decrease.
TREB points out that sales are down 21% in the month of September on a year over year basis and 7.1%, October to October. Is that important?
What are the year-to-date numbers? In 2011, there were 77,604 sales to the end of October. In 2012, there were 66,805 sales or 799 fewer than the previous year. This works out to 0.0103%. That’s slightly more than one percent. All in all, that’s not a significant decline.
April and May were particularly strong, as were the early months. You can’t have the sales early in the year and late in the year too!
Any reasonable analysis should include the expectation of a decline in sales activity. It’s already been recorded for 2012. So, you won’t be seeing it again.
What might we expect going forward? The last two months of the year have been historically slow, so there is unlikely to be any further upward pressure on prices, however don’t forget that in 2011 there were 11,493 transactions in the months of November and December, so there are still a lot of buyers and sellers who would like to do business.
In October each year, we are looking to see that the Fall market confirms the high point of the Spring market, and this year it did, within 2.4%. So, that’s “good news”.
Brian Madigan LL.B., Broker is a Manager at RE/MAX West Realty Inc., Brokerage 416-745-2300.