July 2024: Toronto & GTA MLS® home sales: “Home Shortage”? …Inventory Rising

Greater Toronto, Ontario - August 6, 2024 - Toronto Regional Real Estate Board President Jennifer Pierce this morning released the residential real estate statistical report for home sales in July via the board's monthly publication, MarketWatch. MLS® sales volume this July versus last rose 3.3% to 5,391 homes.

Exactly four years [to the day] earlier - referencing July 2020’s home sales statistics - we wrote, as the market rebounded from the "freeze" that was COVID-19 - "July's 11,081 sales reported by Toronto and GTA Realtors® through the board's MLS® system - a new record for the month." We've come a long way...

Compared to the prior year, July 2019, prices were up 16.9% for that month four years ago. In contrast, prices this July versus July 2023 were down about 1% to $1,106,617. Incidentally, the average price for July 2020 came in at $943,710, just for the record.

Total Active Listings four years ago came in at 15,018 [“...a 16.3% drop…” from that prior July]. This July Total Active Listings were 23,877. All stats quoted herein are year-over-year comparisons - due to the general strong seasonality of the residential real estate market - unless noted otherwise.

Overall

Considering all types and styles of homes across all of TRREB's market area, 5,391 sales were reported by TRREB Realtors® through the board's MLS® system, a 3.3% rise year over year. As noted, the average selling price for those homes was $1,106,617, a .9% decline from last July.

Last month's [June, '24] figures were 6,213 sales averaging $1,162,167.

We're still seeing multiple offer situations for properly priced, well-presented homes in desirable neighbourhoods. People looking for Bungalows for sale in Toronto, The GTA [...and beyond!] continued to drive that particular segment of the market with... let's say enthusiasm. With relatively limited supply and persistent strong demand, as empty nesters look to downsize to single-story homes, there remains elevated competition for those homes in many areas.

The Specific Numbers

In Metro Toronto (the 416 aka area code), reported sales of Detached homes came in at 601 units, a 16% increase year over year. The average selling price of those homes was $1,648,021, an increase of half of 1%. In the balance of TRREB's market area (the GTA or "905"), 1,845 sales of detached homes were reported, which was a decline of .3% at an average selling price of $1,353,581, down one percent even.

As noted, statistics from an overall standpoint were relatively flat: 5,391 homes sold, up 3.3%, at an average selling price of $1,106,617, down .9%.

Sales volume of condominium apartments was relatively flat year-over-year, coming in at 994 units for Metro Toronto, down 1.3%, and 488 units sold through the MLS® system for the balance of the market area, down .4%. The average selling price for those sales was $748,330 in Toronto, down .5%, and $658,340, down 5.7% in the rest of the area.

On Inventory

Given the seasonality of the residential real estate market, it's not uncommon to see sales drop off through the dog days of summer while inventory tends to remain relatively stagnant. This July Total Active Listings [TAL] came in at 23,877, a 55.4% jump over a year earlier. So much for the homes shortage. Homes newly listed on the month came in at 16,296, up eighteen and one-half percent.

"Forward Inventory" gives us a snapshot of where we are in the big picture in terms of the number of homes selling versus the number of homes available. It's calculated simply by taking that TAL figure and dividing it by theTotal Sales Volume: 23,877 listings divided by 5,391 sales on the month gives us an indicated forward inventory of nearly four and a half months - meaning that's how long it would take to sell all the properties on the market now given a consistent rate of sales volume going forward.

After many, many, many months of very tight inventory and calls for the government to "do something" in the face of a "housing shortage," that "problem" appears to be distantly in the rearview mirror. Right now, even with good homes in good areas in the mainstream price ranges, buyers often have lots of choice, and that's reflected in the resurgence of offers with standard conditions like financing and home inspections. A great thing if you're on the buying side with some protection, not to mention time for “sober thought”. This has morphed into a far more "normal" market and that inventory figure of about four and one-half months is actually historically above the “normal” of roughly three months of inventory.

Quoting ...from the GTA Home Sales report:

John DiMichele, TRREB CEO:
"Innovation in new home construction must continue. TRREB applauds Toronto City Council’s decision to consult with the province on adopting single egress stair requirements in the building code for multi residential buildings up to four storeys. This would make it easier to create a variety of multi-family units large enough for families. Another important part of the housing formula is connection to public transit. We are very encouraged to hear that we are closer to an opening date for the Crosstown LRT and are looking forward to a firm announcement.”

Jennifer Pearce, TRREB President:
“It was encouraging to see an uptick in July sales relative to last year. We may be starting to see a positive impact from the two Bank of Canada rate cuts announced in June and July. Additionally, the cost of borrowing is anticipated to decline further in the coming months. Expect sales to accelerate as buyers benefit from lower monthly mortgage payments.”

Jason Mercer, TRREB Chief Market Analyst:
“As more buyers take advantage of more affordable mortgage payments in the months ahead, they will benefit from the substantial build-up in inventory. This will initially keep home prices relatively flat. However, as inventory is absorbed, market conditions will tighten in the absence of a large-scale increase in home completions, ultimately leading to a resumption of price growth.”

Final Thoughts…

Homes sold "about 41.2% slower" on average versus the year-earlier month at 24 days on the market [DOM] versus 17. That's based on “listing days on market” [LDOM]. "Property days on market" [PDOM], which includes the number of days a property was on the market including prior listings - provided such prior listing was with the same brokerage - came in at 36 days on the market compared to 23. That reflects the increase in properties being re-listed, usually coincident with a price reduction, also referred to in modern-day vernacular as a "price improvement." Those days on market stats, by the way, are still relatively short in historic terms: historically, it's taken somewhere between 45 and 90 days to sell depending on market conditions. Market conditions in recent years have been… ummm… extreme as you’re no doubt well aware.

Maybe that’s the “new norm”. But the pendulum doesn’t usually just “swing back to the norm”… it tends to swing beyond it - often to a similar degree to which it’s swinging back from. We’ll see… Can a few interest rate cuts change things that much? Home prices are still stubbornly high - particularly from the vantage point of young people just starting out.

Thanks, as always, for stoppin' in! Enjoy these remaining weeks of summer - those leaves will be starting to turn colour a little before you know it.

Andrew, for theBB.group

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