Toronto & GTA MLS® Stats, October, 2016: Inventory Extremes...

Toronto, Ontario, November 3, 2016 - The Toronto Real Estate Board today released MLS® figures for the month of October, 2016, showing a continuation of the record pace of home sales in Metropolitan Toronto and the GTA / Greater Toronto Area. Chart - Toronto & GTA Home Sales & Average Price by Major Home Type 2016-10

The Total Active Listings figure stood at 10,563 which represents a 34.7% drop from the same period one year ago [16,180 active listings last October]. Obviously this continuing tight inventory situation is the primary driver of across-the-board double digit price growth. Of particular note is the 29.4% jump in the average selling price of Detached homes in the TREB areas surrounding Metropolitan Toronto.

In Metro Toronto itself, 1,088 detached homes changed hands, up 1.5% compared to last October, at an average price of $1,303,339, up 21.7%. [All figures are year-over-year comparisons unless otherwise noted.] In the balance of the Greater Toronto Area, 3,411 Detached homes changed hands, up 13.4%, an average sale price of $948,191, up 29.4% as noted above. Not long ago, observers were marvelling at average Detached prices reaching the million dollar landmark. Now, "Detacheds" in the surrounding area are approaching that level...with with Semis in T.O. not far behind:

While sales of Semi-Detached homes in Metro Toronto actually fell 9.5% to 343 units, their average selling price rose 20.6% to $902,137. In the balance of the GTA, 574 semis sold up 6.7%, at an average sale price of $607,558, up 18.5%. Evidently more buyers are looking further afield due to higher home prices - not to mention more or less double the Land Transfer Taxes - within Metro Toronto.

Sales of Condominium Apartments were strong across all TREB areas: in Toronto 1,895 condo apartments sold through TREB’s MLS® System, up 19.8%, at an average sale price of $459,199, up 12.9%. In “The 905", 807 Condo Apartments sold, up 28.3%, at an average sale price of $359,451, also up 12.9%.

Taking into account all Toronto Real Estate Board areas and all home types, there were 9,768 sales reported in October, up 11.5% from last October's 8,759 sales. The overall average selling price was $762,975, up 21.1% from last October’s $630,254 — that’s a $132,721 average increase.

Inventory Levels Still Extremely Tight

With the number of total active listings standing at 10,563 as noted above, and monthly sales totalling 9,768, we have an “Indicated Forward Inventory" of just 1.08 months.

With regard to the extremely tight inventory, TREB’s Director of Market Analysis, Jason Mercer, added in the report: “…seller’s market conditions continued to prevail as buyers of all home types experienced intense competition in the marketplace. Until we experience sustained relief in the supply of listings, the potential for strong annual rates of price growth will persist, especially in the low-rise market segments.”

Homes sold "27.3% faster" than last October, averaging 16 days on the market [“DOM”] versus 22 days one year ago.

New Mortgage Rules

It remains to be seen what impact changes to mortgage rules announced by Federal Finance Minister Bill Morneau will have. It's entirely possible that the number of sales accelerated in the first half of the month with some of those rules coming into effect as of October 17. Further changes come into effect November 30. While some buyers may have accelerated purchases to get in before the rules changed, the bigger question is, To what degree will those changes negatively impact the market in the months ahead?

“…As we move through November and December, we will be watching the sales and listings trends closely, in light of the recent policy changes announced by the Federal Minister of Finance. TREB will once again be conducting consumer survey work, in order to report on home buying intentions for 2017,” said Larry Cerqua, President of the Toronto Real Estate Board.

A Decade Ago...Just For "Fun" [with this October’s figures in brackets]…

In October, 2006, the single family home overall average TREB MLS® sale price was $356,423 [$762,975]. There were 6,876 sales [8,759], and the average time to sell was about 38 days on the market [16]. With the Total Active Listings standing at 24,367 at that time [10,563], the Indicated Forward Inventory was 3.54 months [1.08]. A good illustration of how tight the inventory is right now, that’s a pretty “normal” inventory level, historically speaking…and well over three times today’s Forward Inventory.

Meanwhile, out on the left coast…

On Wednesday, The Real Estate Board of Greater Vancouver reported, “The composite benchmark Chart - Toronto & GTA Home Sales Historic Annual Stats to 2016-10.png price for all properties in Metro Vancouver was $919,000, up 24.8%…” in October, 2016, but the number of sales “plummeted” 38.8% versus last October. Of course, the BC government instituted a 15% “Foreign Buyer Tax” in August but, according to Senior Canadian Economist David Madani at Capital Economics, the big test for all [Canadian] markets will be the new mortgage rules, as noted in this column at CBC.ca.

Benjamin Tal, Deputy Chief Economist at CIBC World Markets, also gave his opinion in that column, including: “So "the impact of the foreign investment tax is significant," Tal said. But it's not responsible for the more than 30 per cent drop in sales, he said. The drop in Vancouver can also be attributed to more buyers simply being priced out of the market entirely, while other potential buyers are sitting back and waiting to see how the new tax and mortgage measures play out, he said.

Vancouver's market may not be a sign of things to come in Toronto, according to Tal, because of the foreign-buyers tax in Vancouver and because the market there is traditionally more volatile than Toronto’s.”

Adds Madani, "I do think the Vancouver market is going to have a very, very hard landing that will probably drag out for a few years potentially," Madani said. "Now Toronto, I'm thinking about the longer term. I don't think the correction will be as bad as the Vancouver market."

Time, as it generally does, will tell…

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