Toronto & GTA MLS® Home Sales - May, 2017: Inventory jumps & Sales Fall YoY; Prices Soften

Toronto - June 5, 2017 - In the wake of the Ontario government's new "Fair Housing Plan" introduced in the second half of April, 2017, the much-anticipated Toronto & GTA [Greater Toronto Area] May MLS® statistics were released this morning by the Toronto Real Estate Board showing a 42.9% spike in the Total Active Listings...alongside a 20.3% drop in the number of homes sold. As for prices, the report notes that prices are up 14.9% to $863,910 on average compared to May, 2016's $752,100. What's probably more relevant, however, is that prices are down 6.1% on a month-over-month basis from April's $919,614. Chart - Toronto & GTA Home Sales & Average Price by Major Home Type 2017-05

We've always maintained that, because of the seasonal nature of residential real estate, year-over-year comparisons are more relevant than month-over-month: prices generally soften as the market transitions from "spring" to the dog days of summer, for example. But this is May versus April...and it's virtually unheard of to see prices soften this early. [a 6.1% drop in that overall average equates to $55,704 in one month.] Then again, this is no "normal" market and, as we've noted before, many observers have been cautioning that it's not sustainable.

It's also noteworthy that, as we pointed out last month, prices for the Detached group in "The 905" had already fallen in April compared to March [$1,098,827 vs $1,124,088]. The drop for the Detached group in the balance of the GTA, then, is actually 8.74% from March's "peak"...or just shy of $100k on average. And, while Detached home prices in Metro Toronto did rise in April compared to March, they'd actually fallen in March versus February...so prices were virtually unchanged in April compared to February [$1,578,542 vs $1,573,622]...and, to re-cap, have now dropped to $1,503,868...with available listings growing fast.

One other note: That slide in the number of sales appeared to accelerate in the second half of the month, at least in some areas.

Relief on the Inventory Front...

The inventory spike of 42.9% to 18,477 Active Listings [from less than 13,000 one year ago], is welcome news in terms of bringing balance to the market - though it's still considered relatively tight supply Chart - Toronto & GTA Home Sales Year-Over-Year Summary @ 2017-05.png historically speaking with just 1.8 months of forward inventory. If sales continue to soften and more sellers continue to list, however, this could swing very quickly to a buyer's market - if it hasn't already. The report does note that the number of Condo Apartments for sale was actually down versus last May...which indicates that the jump in available Freeholds was even more pronounced than the 42.9% ["indicates", because there are other factors...the equation doesn't include Condo Townhomes, for example].

Comparatively, that Total Active Listings figure was roughly equal to May 2015's 18,585 listings [11,706 sales that month @ $649,599 avg]; well below May 2014's 20,679 Listings [11,079 sales @ $585,204 avg]; 22,677 Listings in May 2013 [10,182 sales @ $542,174 avg], and 20,462 Listings 5 years ago in May 2012 [10,850 sales @ $516,787 avg]. And, just for fun, a decade ago - May, 2007 - there was "an astonishing" 11,146 sales averaging $382,787...and a Total Active Listings count of 23,739 [equalling about 2.13 months of forward inventory.

Specific Numbers

Sales of Detached homes in Toronto fell 26.1% to 1,146 units at an average sale price of $1,503,868, up 16.6% year-over-year [-4.7% vs April, 2017]. The Detached group in "The 905" - the balance of the Greater Toronto Area - saw 3,611 sales, down 26.4%, at an average price of $1,025,893, up an even 15% [but -6.6% vs April, 2017]. Chart - Toronto & GTA Home Sales Historic Annual Stats to 2017-05.png

Condo Apartment MLS® sales in "The 416" totalled 2,038 units, down 4.3%, at an average sale price of $564,808, up 27.7%. In the balance of the Greater Toronto Area, 816 Condo Apartments changed hands, down 11.1%, at an average of $448,867, up 29%.

Comparing average prices in the two areas, the ratio has stayed remarkably consistent over a five year period. A Detached home in "The 905" is about 68.2% of the cost of one in Metro Toronto today versus 70.6% 5 years ago. Condo Apartments outside the City are about 79.5% of the cost of one in the City - virtually unchanged from 79.4% 5 years ago.

Overall, average prices rose across across the board while the number of sales fell across the board. The homes that did sell sold "26.7% faster" than last May at 11 Days on Market compared to 15. Though that's "slower" than April's 9 DOM and March's 10. February's average was 13. Five years ago the average was 21 DOM.

Bungalow style homes continued to be popular across the Toronto and the GTA.

The last word in the report goes, as usual, to TREB's Director of Market Analysis, Jason Mercer: “The actual, or normalized, effect of the Ontario Fair Housing Plan remains to be seen. In the past, some housing policy changes have initially led to an overreaction on the part of homeowners and buyers, which later balanced out. On the listings front, the increase in active listings suggests that homeowners, after a protracted delay, are starting to react to the strong price growth we’ve experienced over the past year by listing their home for sale to take advantage of these equity gains.”

Until next time, thank-you for reading...

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Dec 22, 2018