November 2019: Toronto & GTA MLS® home sales: Inventory's STILL the Story

By: JustBungalows

November 2019: Toronto & GTA MLS® home sales: Inventory's STILL the Story


Toronto, Ontario, December 4, 2019 - The Toronto Real Estate Board’s monthly MLS® residential market statistical report, “MarketWatch”, was released today by Board President Chart - 2019-11 Toronto & GTA Home Sales YoY SummaryMichael Collins. The report confirmed what the vast majority of Realtors® and market-watchers had expected based on front-line activity, namely a strong showing across the board. The sole negative signs in the report were - yet again - in front of the inventory-related numbers and, predictably, the “Days on Market” figure with homes across TREB’s market area selling more quickly than last November in the face of that tight supply plus robust demand.

Overall, 7,090 residential sales were reported on the month, a 14.2% jump over last November, at an average selling price of $843,637, up a healthy 7.1%. All figures reported are year-over-year comparisons, except where otherwise noted.

Those stats represented a dip from October, 2019’s numbers which is to be expected as the colder weather takes hold and many of us turn our attention to the Holidays and the New Year. Regardless: For the month of Chart - 2019-11 Toronto & GTA Home Sales & Average Price by Major Home TypeNovember, they’re pretty strong numbers and represent a very slight moderation from the prior month.

It’s also interesting to note that while price gains were strongest in the Condo Apartment sector, actual sales volume for that group was relatively flat. Conversely, freehold low-rise homes - meaning Detached, Semi-Detached, Freehold Townhomes, etcetera - saw generally strong growth in the volume of sales but significantly more tempered price growth.

Naturally there were regional fluctuations: For an update of your own neighbourhood, including detailed information on Sold properties, request a Neighbourhood Update.

Note we've again posted the larger chart of "Sales Volume by Price & Major Home Type" at the very bottom of this post.

TREB’s Chief Market Analyst, Jason Mercer, offered in the Report, “Strong population growth in the GTA coupled with declining negotiated mortgage rates resulted in sales accounting for a greater share of listings in November and throughout the second half of 2019. Increased competition between buyers has resulted in an acceleration in price growth. Expect the rate of price growth to increase further if we see no relief on the listings supply front.”

Specific Numbers

Metropolitan Toronto - “The 416” area code, generally - saw 788 Detached homes change hands, up 12.7%, averaging a selling price of $1,360,246, up 4.9%. In the balance of the Greater Toronto Area - “The 905" area code generally - 2,475 Detached houses were reported sold in November, a 27.8% spike, at an average sale Chart - 2019-11 Toronto & GTA Home Sales Historic Annual & Monthly Statsprice of $943,494, up 4.3%.

Given that Semi-Detached houses in Metropolitan Toronto sell for about thirteen percent more than Detached homes in the rest of the GTA, it’s not that surprising that sales of “Detacheds” in the latter are enjoying such strong acceleration in volume… not to mention the “double Land Transfer Tax” in The Big Smoke. That said, while price growth for Toronto Semis was much stronger than that of their “905” counterparts, actual volume was much stronger in Toronto [+19.3% versus +0.3%].

As for the Condominium Apartment group, Metro T.O. saw 1,368 units sell, up a razor-thin 0.4%, at an average of $659,855, up a relatively impressive 10.9%. The rest of the GTA saw 534 “Condos” sell, up 2.5%, averaging $509,559, bettering the Toronto gain at +12.2%.

Inventory's Still “The Story”

Overall supply in the Toronto and GTA Market continues to be an issue. We’re not so sure this is the “housing shortage” many refer to; more likely it’s the fact that empty nesters aren’t abandoning those nests...yet. Maybe having seen the price levels at the 2017 peak they’ve been waiting for those levels to return? If that’s actually what’s been holding many of them back, expect a stronger-than-normal increase in inventory levels for the Spring, 2020 market as more begin to “make that move” to smaller digs whether within their existing areas or to move further afield and - hopefully - pad those retirement accounts with some tax-free dollars. We’re seeing heavy interest in areas like Niagara, Guelph/Wellington, The Kawarthas, Northumberland, Prince Edward County, Peterborough, and so on...not to mention further out around the perimeter of the Greater Golden Horseshoe...and beyond. Think Kingston, Kitchener-Waterloo, points North

Total Active Listings tanked 27.2% versus last November - not encouraging for those trying to get into the market. The other big headwind is, of course, the mortgage interest rate “stress test” which requires borrowers to qualify at their quoted rate plus two full percentage points. “Total Actives” stood at 11,958 as of month-end. Dividing by the month’s sales total of 7,090 gives us an “Indicated Forward Inventory” of just 7.25 weeks, give or take. That’s tight by historical standards. It was far more constrained at the 2017 peak, of course...but we’re not seeing 30%+ YoY price growth, either.

The Absorption Rate refers to how quickly [or slowly] the market “absorbs” newly listed homes as sales. This is also quoted as the “Sales to New Listings Ratio”. It’s calculated by dividing the number of sales on the month by the number of new listings on the month, thus 7,090 / 8,650, or .82 - which is to say, to nobody’s surprise, that the market’s currently “absorbing new listings” at a very rapid rate.

We tend to lean toward the TAL number as it’s a “purer” indication of actual inventory given the common practice of terminating and “rewriting” listings, usually coincident with a price reduction.

On Bungalows...

While many would-be downsizers do appear to be waiting, there’s still very strong demand for Bungalows across the GTA. There are some empty-nesters not waiting to make that move, of course. And many of those want Bungalows with yards; apartments with balconies will - maybe - come later for a lot of these folks. 

But Bungalows are also an attractive alternative for younger buyers who find the price point more manageable in many cases - despite less floor area - along with a larger yard than they’d get with newer subdivision homes or townhomes. 

Some of those younger buyers also see the potential of expanding the Bungalow rather than moving as their square footage needs grow. For the same reasons, the “one storey” is a popular target of builders and investors: it’s relatively simple to add a storey...or knock the house down completely, often replacing it with a monster or "McMansion" [often to the deep chagrin of neighbouring owners of original, more modest homes]. The generally larger lot also means the house’s basic footprint can be expanded outward and upward. Cha-ching...

Final Thoughts...

One further indication of that constrained inventory is the time it took for the average GTA home to sell in November: “11.1% faster” than a year earlier at 24 Days on Market [DoM] compared to 27.

Added Mr. Collins in the report, "An increasing number of home buyers impacted by demand-side policies over the past three years, including the 2017 Ontario Fair Housing Plan and the OSFI mortgage stress test, have moved back into the market for ownership housing. Based on affordability and stricter mortgage qualification standards, many buyers may have likely adjusted their preferences, changing the type and/or location of home they ultimately chose to purchase."

Thank-you for reading. Here’s to a “moderate” winter, and the Happiest of Holiday Seasons / New Years celebrations to "You and Yours"… #StaySafe

- Andrew, For and JustBungalows

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Chart - 2019-11 Toronto & GTA Home Sales Volume by Price & Type