A lot has happened in the last year. The market was stupid crazy to start, then stupid slow to end. In between there were ups and downs attributed to some government intervention and some buyer fatigue.
On a personal note, and the reason for such a long time between my posts, I switched my brokerage. I am now part of Royal LePage Terrequity Realty. This move will allow me to better serve my clients. With offices across the city, and the ability for me to easily scale up my team, I am confident that I can serve your needs even to an even higher standard than you receive already!
But you didn’t come here to read about my move from one brokerage to another because you understand that it doesn’t matter who I am affiliated with. You know that you can always depend on great service from me. As long as I get what I need from my broker, then you are good. You came here for some insight. Here it is!
It was almost a year to the day that I started tracking the daily numbers with respect to inventory in the City of Toronto. I was compelled to do so after writing my blog post Why does inventory matter when talking about real estate? It was here that I pointed out that the main reason for price escalations were the low inventory numbers. And they were low! On March 15, 2017 there were just 1,915 properties available for sale in the City of Toronto*. This includes condo and freehold. As of this morning, there are 3,650 properties available for sale, split 1,820 freehold and 1,830 condo. That is almost twice as many available properties.
Watch out for cracks in the ice!
As many retailers salivate for the Christmas season where they do the bulk of their sales, Real Estate Representatives look for the spring thaw. This is typically when we do the bulk of our sales. This year is a particularly delicate one to navigate though.
Before I get into my analysis, though, just some information to set the stage. I track more than simply the City of Toronto. I currently live in Etobicoke, but my business takes me to other parts of the city too. I believe in remaining as informed as possible about all areas, and when I am unfamiliar with an area I have business relationships with those who are familiar with that area.
If you saw the spreadsheet I use for tracking inventory you will find many worksheets with various areas such as Mississauga, Oakville, Brampton, Milton and all regions on the Toronto Real Estate Board (TREB). I keep tabs on the daily changes, months inventory, sold conditional properties and more. This information over the last year has been an invaluable asset when assisting my clients.
What has struck me about tracking all this information is that what happens in the City of Toronto does not always happen in Peel, York and Durham regions. On one of my recent daily posts I showed how the available months inventory varies from the City of Toronto to the rest of TREB. One of the main reasons for this is that many condos in the GTA are concentrated in the City of Toronto.
Coincidentally, it is the condo market that is on fire right now. I suggested back in October that this would happen when the mortgage rules changed. I want to make it clear that I believe all families should find ways to live within their means and temper consumer debt. I understand and agree with some of the measures the government took in terms of tightening mortgage rules. Those rule changes had unintended consequences though. They drove more people to the condo market.
As I alluded to, that more people are contemplating condos has likely more to do with pricing than it does lifestyle. Since January 1, 2018 the City of Toronto has sold 4,822 (as of 8:30pm on March 15, 2018*). From January 1, 2017 to March 15, 2017 the City of Toronto sold 7,262 properties. So yes, volume is down considerably.
Other areas are down considerably too. In Oakville, for example, they have sold 786 properties from January 1, 2017 to March 15, 2017. During that same time this year they sold just 500. In Markham it was 946 last year versus 462 this year. Newmarket was 379 last year to 175 this year. Pickering was 241 last year versus 174 this year. These include both freehold and condos.
The result is that prices are coming down in these areas. When last year you needed to pounce on a property if you liked it, this year, depending on the property, you can take your time. I recently had a listing in Oakville that took about 2 months to sell. The average days on market during this time was 3 months. We had over 125 showings. We were also the least expensive, 3 bedroom freehold property for sale, yet we still needed 2 months before we sold. This shows that there is interest in the market. There are buyers looking. At least 125 of them under $600,000 in Oakville!
This shows that those buyers are very cautious. That is reflected in the sales volume and Sellers need to temper their expectations. A Seller that is expecting a high price because a similar property sold last March for a high price will be very disappointed, depending on the area they live.
One metric we use to help with understanding the market is months of inventory. This tells us how many months it will take to sell the existing listings, assuming no new listings get added. In the City of Toronto on March 15, 2017 that number was an insanely low 0.66 months. Today that number sits at 1.82 months. This is still a Seller’s market.
We consider it a Seller’s market when there are fewer than 4 months inventory. 4-6 months is a balanced market, and more than 6 months is a Buyer’s market. This said, with barely a 3 week supply you get the frenzy we saw last year. Sitting at closer to 2 months inventory and while by definition both are Seller’s markets, they feel vastly different.
In some of the suburbs the differences are even greater. On May 15, 2017 Oakville had a 2.1 month supply. Today it is 3.41 months. Mississauga went from 1.48 months on May 15, 2017 to 2.18 months today. Markham and Newmarket are currently sitting at about 2 months inventory and Pickering is closer to 3 months.
Again, by definition this is still a Seller’s market, but buyers are starting to have an easier go of things. Properties are staying on the market longer, accepting conditions and not as many are facing multiple offers. At least, not in the ‘burbs.
So where does this leave you? It depends on whether you are a Buyer or Seller. I’m happy to have a conversation by email, text or voice to discuss your needs. And if you want to meet in person, then check our my 1st Time Home Buyer Seminar. It is a free seminar at 6pm on March 21 at the Rogers Centre Hotel. You can find details here: https://www.facebook.com/events/1676380585771032/.
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Posted on March 15, 2018 by:
Stefanos Papadopoulos - Real Estate Broker – Royal LePage Terrequity Realty, Brokerage*
o:416-231-5000 | c:416-427-7432 | e: soldbystefanos@gmail.com | i: www.soldbystefanos.com
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Photo courtesy of Wonderland Photography
