November Housing Analysis

Toronto’s real estate spin doctors had their work cut out for them this month.  While the news was not all bad from the November numbers, extracting exciting, positive results was not easy.  Sales were down 15% from 2017, which is noteworthy given that November 2017 sales were down 14% from 2016.  The small positive was that prices were up year-over-year, but they were down month-over-month and remember that November 2017 prices were below 2016’s.  Meaning the price of the average home in the GTA has only gone up 1.5% in the last two years.

Prices

The typical price flow throughout the year is to have prices increase through the spring before trailing off in the summer months.  Back to school shopping helps to re-establish prices at or slightly above the spring peaks before lowering again through the winter.  This is to say that November prices should be near peak prices for the year.  Analyzing the four sectors of the housing market we see that only semi-detached homes, and to some extent condos, achieved this in Toronto.  Semi-detached homes are barely 1% off their peak 2018 price, while condos are down only 3% from their September high.  Townhouses are down a noteworthy 7%, while detached homes continue to lead the struggle, dropping 9% since May.

Toronto Prices

Housing Sector November 2018 Price 2018 Price Peak Difference
Detached $1,301,382 $1,426,094 (May) $-124,712 (-9%)
Semis $1,060,359 $1,067,128 (May) $-6,769 (-1%)
Townhouses $739,837 $792,180 (April) $-52,343 (-7%)
Condos $595,678 $615,582 (Sept) $-19,904 (-3%)

Source: TREB

In comparison, the remaining GTA markets have more closely followed this trend.  All four segments are down from their 2018 peak prices; however, all segments have only dropped between 1 and 3%.

GTA Prices

Housing Sector November 2018 Price 2018 Price Peak Difference
Detached $903,517 $929,401 (April) $-25,884 (-3%)
Semis $655,504 $667,979 (August) $-12,475 (-2%)
Townhouses $613,846 $621,564 (Oct) $-7,718 (-1%)
Condos $454,288 $461,013 (Oct) $-6,725 (-1%)

Source: TREB

Sales to New Listing Ratios

Demand dropped last month, but so too did supply.  This has caused sales to new listings ratios to rise in comparison to 2017 figures.  Detached ratios rose in both Toronto and the GTA, with Toronto’s increasing from 48% to 56% and the GTA’s from 40% to 48%.  The condo markets showed little change with the GTA rising to 67% from 63%, while Toronto’s sales to new listings ratio remained flat at 71%.

Overall, the November prices showed the market is softening while the tightening of the sales to new listings ratios points to a possible rebound in the new year.  Prices may be up from November 2017; however, they are down month-over-month and have barely moved over the last two years. With rising interest rates, challenging stress tests and lower sales, only further tightening supply will help to rise prices.

December will be interesting to see if both sales and new listings remain low or if either begin to change course.  How demand and supply end the year will provide good insight into whether prices will continue to fall or if 2019 will offer some promise.

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