Strong Sales & Price Growth; Tight Inventory Continues in September, 2016

Toronto, Ontario, October 5, 2016 - Strong sales growth continued in September with Toronto and GTA Realtors® reporting 21.5% more sales through the Toronto Real Estate Board's MLS® system compared to the year earlier period, according to TREB president Larry Cerqua in the monthly MarketWatch statistical report released today. Chart - Toronto & GTA Home Sales & Average Price by Major Home Type 2016-09

Aside from continued strong sales numbers, the report confirms the continuation of extremely tight inventory which, combined with strong demand, is keeping price growth well above historical norms.

The Total Active Listings figure stood at 11,255, down 36.6% from 17,765 available listings at the same time last year. Further, homes sold "27.3% faster" this September compared to last, taking an average 16 days to sell versus 22 days last September.

Overall - including all home types and all TREB areas - there were 9,902 sales in September at an average sale price of $755,755. That brings the TREB year-to-date total to 89,660 sales at an average price of $721,750. Just for fun, looking back a decade to 2006, there were 83,084 home sales for the entire year...at an average selling price of $351,941.

In Metropolitan Toronto, sales of Detached homes rose a relatively modest 4.7%, and sales of Semi-Detached homes actually fell 3.5%. Based on the inventory and price growth figures, those numbers are probably the result of the severe lack of inventory or, as the report says, "In both cases, the year-over-year dip in new listings was likely the issue."

That 4.7% rise in “the 416” area code meant a total of 1,098 detached homes changed hands at an average price of $1,294,482, up 23%. The 3.5% drop in the number of Toronto Semis sold meant 302 changed hands at an average price of $887,916, up 19.7%

In the balance of the GTA, 3,610 sales of Detached homes were reported, up 28.6%, at an average price of $928,414, up 26.6%. 618 sales of "Semis" were reported in "the 905" area code, up 19.1%, at an average sale price of $608,122, up 22.2%.

Chart - Toronto & GTA Home Sales Year-Over-Year Summary @ 2016-09.png Sales of Condo Apartments were also very strong across TREB's market area. 1,787 sales were reported in Metro Toronto, up 24.3%, an average price of $446,294 which represented a "modest" 6.5% rise year-over-year. In the balance of the GTA there were 793 condo apartment sales reported, up 32.4%, at an average price of $367,260, up 19.4%.

Based on the Total Active Listings [11,255] versus total sales for the month [9,902], "Forward Inventory" remains extremely tight - as indicated above - at just 1.14 months. At the same time last year those numbers were 17,765 Total Actives / 8,200 solds = Forward Inventory of 2.17 months. At the end of September, 2014 they were 19,165/8,051 = 2.38 months.

How Long Can This Bull Run?

There's a good number of people wondering how long the market can run at this rate. Industry observers generally agree that one of the early signs of a market turning down can be a softening in the number of sales of higher-end homes. That doesn't appear to be happening to this point. For example, let's look at the City of Vaughan: in September 2015, there were 63 sales over the million dollar mark [averaging $1,446,988 & 25 days to sell; High/Low $4,200,000/$1,000,000]. This September there were 163 sales of $1 million or more in Vaughan [averaging $1,514,067 & 13 days to sell; High/Low $4,800,000/$1,000,000].

For the record, of those "$1 million +" Vaughan sales, 3 were Bungalows last September at an average sale price of $1,616,667 [High/Low $2,250,000/$1,230,000; 5 days to sell]. This September, 12 were Bungalows - at an average price of $1,368,458 [High/Low $3,420,000/$1,025,000; 10 days to sell]. Stay tuned...

PROVINCE-WIDE SUMMARY

In the bigger picture, the Ontario Real Estate Association reported that province-wide home sales hit a new record for the month of September at 21,540 units, up 13.8% from a year earlier, at an average Chart - Toronto & GTA Home Sales Historic Annual Stats to 2016-09.png price of $550,305 - also a record - which was up 19.6% from September 2015. The national average sale price for the month was $474,590, up 9.5%. Province-wide there were 45,934 homes for sale as of the end of September, down 32% compared to a year earlier. Those figures are "running near record lows", according to the report.

Consumer Confidence in Ontario was little changed in September, though "The highest proportion ever of Ontarians expect their budgets to hold steady over the next six months...".

Also of recent note are the “surprise” changes to mortgage rules announced by the federal Department of Finance in attempt to cool off the hotter housing markets. Here’s an article from Canadian Mortgage Trends which summarizes the changes…and uses terms like “nail in the coffin”, “crack the housing market”, and “crisis”.

TREB’s Director of Market Analysis, Jason Mercer, commented [in the MarketWatch report] with regard to those mortgage rule changes, “The Toronto Real Estate Board will be closely monitoring how the recent changes to Federal mortgage lending guidelines and capital gains tax exemption rules impact the housing market in the Greater Toronto Area. While these changes are pointed at the demand for ownership housing, it is important to note that much of the upward pressure on home prices in the GTA has been based on the declining inventory of homes available for sale.”

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