2021-12 Toronto & GTA Residential Real Estate: #CrazyTimes

Toronto, Ontario, January 5, 2022 - Realtors® in Toronto and the GTA this morning released their monthly stats publication, MarketWatch, for the final month of 2021. While sales were off overall compared to last December, the bigger picture stories remain historically low inventory levels combined with - naturally in the face of demand for that inventory - record price levels.

While home sales reported via TRREB’s MLS® system were down nearly 16% overall - no doubt due to the combination of constrained supply and high price levels - the Condo Apartment sector fared better than the low-rise sector - likely due to better supply and the generally lower price point. 6,031 residential sales transactions were reported in December at an average sale price of $1,157,849, a 24.2% pop. "Overall" refers to all home types and styles across all of the Toronto region real estate Board's market area. All figures quoted herein are year-over-year comparisons unless otherwise noted.

The inventory picture

The total number of Active Listings was down 59% to 3,232 homes available for sale in all of TRREB’s market area.

"Forward inventory" gives us a snapshot of how much inventory is available on the market in terms of the rate of sales. It's calculated simply by dividing the number of Total Active Listings by the month's sales volume. As of month-end that works out to .54 - or about two weeks of available homes inventory. That's ridiculously tight for any time of year but particularly for December which tends to be one of the slowest months for residential real estate sales.

With demand continuing high and inventory low it's no shock that homes sold "41.2% faster" this December versus last at 14 days on the market versus 24. "Property days on market" - which takes into account listings that were terminated/cancelled and subsequently relisted by the same brokerage - reflected similar stats to last year at "45.7% faster" at 19 days versus 35.

Specific numbers

Sales of detached homes in metropolitan Toronto came in at 567 on the month, a 12.9% drop, at an average selling price of $1,698,178, a 14.9% increase. Detached sales in the balance of the greater Toronto area - "The 905" (area code) - totalled 1,870 on the month, a 21.2% decrease, averaging $1,568,583, a spike of ...gulp... 33.3%. Can you say "unsustainable"? Honestly, who knows… been hearing that from a variety of sources for a very long time...

Sales of condo apartments, as noted above, also stumbled in December but not to the degree the lowrise group did. Sales in Metro Toronto were 1447 on the month, down 6.5%, and an average sale price of $730,792, up 16.8%. The rest of the area saw 611 condo apartment sales reported, down 4.7%, averaging $667,269, up 23.4%.

Quotable from the report…

TRREB Chief Market Analyst Jason Mercer: “Tight market conditions prevailed throughout the GTA and broader Greater Golden Horseshoe in 2021, with a lack of inventory noted across all home types. The result was intense competition between buyers, pushing selling prices up by double digits year-over-year. Looking forward, the only sustainable way to moderate price growth will be to bring on more supply. History has shown that demand-side policies, such as additional taxation on principal residences, foreign buyers, and small-scale investors, have not been sustainable long-term solutions to housing affordability or supply constraints.”

TRREB President Kevin Crigger: “Despite continuing waves of COVID-19, demand for ownership housing sustained a record pace in 2021. Growth in many sectors of the economy supported job creation, especially in positions supporting above-average earnings. Added to this was the fact that borrowing costs remained extremely low. These factors supported not only a continuation in demand for ground oriented homes, but also a resurgence in the condo segment as well.”

Mr. Mercer's quote above, "...the only sustainable way to moderate price growth will be to bring on more supply..." appears to imply some misguidance (?!) in the various forms of government intervention. While "demand-side policies...have not been sustainable long-term", that does not mean supply-side policies necessarily are, either. More likely, markets will self-correct... one way or another... sooner or later... ! (BTW - artificial, ridiculously low interest rates weren't mentioned as a "demand side policy"... yet that is, far and away, the single-most potent contributor to this market's issues - regardless of which side of the fence you're on, home buyer or home seller... or home holder.)

Thanks, as always, for stopping by. Let's hope 2022 brings us all peace, health, calm, stability, and happiness in general… Happy New Year.
Andrew.

#theBB.group
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Jan 29, 2022