Here's your Toronto real estate market report for January. I didn't read any predictions that had Toronto getting off to a hot start this year. When I wrote a "What's in store for 2018?" post back in December I was commenting that there seemed to be more potential headwinds than tailwinds this year (and one already came through with a 0.25% interest rate hike in January). Houses and condos continue to act very differently - which is why I do two sets of charts!
Here's what I saw in January. As always, these are just selected highlights. The full set of market charts is available on SlideShare.
1) The number of active listings decreased, which is very unusual
For houses it was the first time active listings have dropped from December to January since 2012. For condos it has only happened twice in the last 22 years, most recently in 2009. Condo listings are at historically low levels right now, as they have been since 2016. January was 40% below the January average of the last 7 years.
For houses, it brings the numbers closer to the average of the last 7 years, but active listings were still 18% above the January norm:
2) 416 House MOI is worth keeping an eye on
December's Months Of Inventory (MOI) for freeholds was the highest it was since 2008 (though it was only 2.6, compared to the 2008 number of 7.8). January's figure of 3.1 is the highest January since 2009 (6.7), back when the market had about a 7 month blip around the global financial crisis.
Detached homes are the ones dragging things down. The MOI figured for semis is 2.3, while rowhouses are are 2.1 months. Detached, however is at 3.4. So the lower-priced homes are still moving well.
3) Beware of YoY comparisons in the condo market
2016 was a big year for 416 condo sales, beating the previous sales record by 18%. And as you see below, 2017 started out on fire, with the first 4 months of 2017 exceeding the record 2016 pace by 15%.
So while Jan 2017 sales were down 21% versus last year's on fire number they were only 6 units away from equaling 2016 and were over 3% above the 7 year average. The press tends to only concentrate on year-over-year and misses the broader context.
4) I still expect the "February Bump"
I wrote a whole blog post on the February Bump last year. Every year since 1996 (as far back as available TREB monthly data goes), the average Feb price has been higher than Jan. The last two years have seen 18% and 16% increases. I don't expect that again, but I do expect the price will rise. The major reason is that the quality of listing stock is much improved, as shown in this chart from a post I did called "Why do Toronto house prices fall in the summer?" Note the blue property tax line and how it rises sharply from Jan to Feb.
Simply put, the quality of stuff on the market in Dec and Jan is low, and prices reflect that. This January when I did a check-in at mid-month, 71% of the freehold properties had been on the market 30 days or more. So it was pretty stale inventory. It freshened up in the latter half of the month.
As always, you will find the full set of market charts on SlideShare.
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About Scott Ingram CPA, CA, MBA
Would you like to make better-informed real estate decisions? I believe knowledge is power. For that reason, I invest a lot of time researching and analyzing data and trends in the Toronto real estate market. My Chartered Accountant (CPA, CA) side also compels me to dig a lot deeper into the numbers on individual properties my clients are interested in. The better the information you have, the better decisions you will make. To discuss how I can assist you with your real estate needs, call me or reach out via the Contact Me section of my homepage.
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