December is not the month to judge a year by. Sales and new listings drop off significantly and prices usually drift downwards during the best of times. However, even by December standards, this was a bad month for the GTA’s housing market. Sales for the month were down year-over-year by 22.5%, while prices barely covered inflation, rising by 2.1%. The momentum TREB reported for the second half of the year has seemingly vanished, and the outlook for 2019 is far from promising.
Turning away from year-over-year comparisons, all average prices were down from their 2018 peak. This is far from abnormal for the final month of the year; however, the amount some sectors are down is troubling. The average detached home in Toronto is down $280,000 from its peak, while the remainder of the GTA is down $38,000. Semi-detached homes in the suburbs held up well, but semis in Toronto dropped $127,000 as the year ended. Townhouses in both the city and the suburbs are down, 7% and 5% respectively. Even Toronto’s high-flying condo market has dropped from its new record high by $20,000.
All of these numbers could be spun by claiming it is unfair to compare the prices of different months; however, no amount of positive spinning can defend December’s sales totals. December sales dropped by 25% in Toronto year-over-year and 22% for the remainder of the GTA. Sales total for the month have not been this low since 2012, when the average price of a home in the GTA was only $478,739. Most concerning for 2019 is that coupled with November, these December numbers reserve the trend of improving sales figures. In comparison to 2017, which was also a low sales year, 2018 sales had been gaining through the summer and early fall, only to lose that momentum by the end of the year.
|Toronto Sales||GTA Sales|
|2017||2018||% Change||2017||2018||% Change|
Source: TREB, Six Housing Sense
To defend the low sales much attention is being paid to the fact that new listings are also dropping, and they are. For the month of December, new listings dropped by a greater percentage than sales, but overall sales are down further. This is specifically demonstrated by the drop in the sales to active listings ratio. In December 2017 this ratio was at 38% under TREB’s jurisdiction. This past month that ratio dropped to 33% (the ratio was also down year-over-year in November).
As we enter the 2019 housing market, we predict all eyes will be on inventory levels in Toronto and the GTA. How inventory totals move will determine how prices react to the drop in sales. This will place added importance on the sales to active listings ratio in the coming year.