NOTES FROM THE PRESIDENT: Weekly CP Meeting Recap
Each week, The Glenn Team provide highlights from the weekly CP office meeting to provide a balanced overview of the Toronto and GTA markets and relevant issues affecting real estate markets. Meetings are overseen by Chestnut Park's CEO and Broker of Record, Chris Kapches, LLB, who provides weekly analysis and commentary. Additional input is provided by the CP Toronto office Realtors who give a day to day, real life perspective of the local markets.
A GREAT MARKET... NO, REALLY!
The focus of this week's meeting was to focus on the positive. Which is to say, the positive market we are currently experiencing in Toronto. Chris wanted to reenforce this reality by comparing this market to the market in 2011, which at the time was regarded as being a great market. In 2011, TREB stated that "it’s a seller’s market... the results have been above average annual rates of price growth for most homes." At that time, the average sale price for the GTA was only $442,000, average days on market were about 26 and total sales numbers were 7642; very close to sales numbers for this past month. What's changed since 2011? Average sale price is now up to $780,000 (according to TREB's October numbers) and we've had a substantial increase in interest rates coupled with a lot of government legislation. And yet, despite these changes, the average days on market for October 2017 was 23 for the GTA, 3 days fewer than in 2011. Sales numbers are down from last year by about 26%, but compared to the 35% drop we had after April, we're actually slowly reducing that gap.
The main point here is that we all need to have some perspective about where we've been and where we are now. The period from Oct. 2016 to April 2017 was, according to Chris, “not a real market. When you have prices changes of 30% year over year, clearly that's not sustainable.” Last year's average days on market was 16, which Chris says is “incomprehensible for an area like the 416 and 905 to be selling that fast.”
As stated above, there were 7118 sales in the GTA for the month of October, down from around 9000 last year, or about a 26% decline. That number was less dramatic in the 416, declining by only 21% vs. the 29% in the 905 area code. Clearly, the 416 continues to move faster than the GTA, but the pacing is still quite fast for the entire area. Chestnut Park's other on-staff lawyer Richard Steward commented that "comparators are off... every past experience becomes the new norm," meaning that many looking at the Toronto market fail to appreciate how good the market continues to be because of negative media rhetoric and because they are still comparing it to that crazy run from October 2016 to April of this year. Chris thinks the market has now regularized and is in a good place.
FIRST WE TAKE MANHATTAN
As another point of comparison, Chris thought it interesting to look at the average days on market for properties in the Manhattan real estate market. The average days on market for this past year in Manhattan was 447! Last year, it was a heady 346 days! Clearly Toronto is not New York and property values in Manhattan far exceed many in Toronto on the whole, but the point here is that even with the "insane" numbers we're seeing in Toronto, properties are still selling in a very short amount of time, relative to major city boroughs like Manhattan, which would indicate that we're still very much in a seller's market.
THE REST OF THE STORY
To finish up with discussions of October's statistics, the average sale price for detached properties in the GTA came in at $1,287,000, semi-detached properties were $948,000 on average and condos were $555,000 on average for the GTA. In Toronto's central core, where the majority of condo sales are occurring, the average rises to $620,000. Because of these higher numbers, detached property sales are down by about 1.5% Like the Manhattanites, Toronto buyers seems to becoming more patient and decisive about what they are buying; especially in the highest price point. As mentioned, average days on market came in at 23; Chris still feels that a truly balanced market would see days on market increase to the 90 day mark. Lastly, there were fewer properties over the $2M range selling this October at 208 from the 300 we saw last year. This would help account for the decline in average sale price since last year.
TREB indicates inventory levels are around 1.7 months for the GTA and 1.4 months for the 416. Chris feels these numbers are skewed by the market rally since October, as TREB uses a 12 month running average. His numbers would put the 416 closer to 2.5 and the 905 closer to 3 months. Properties in certain areas continue to sell over 100% of asking and in some cases, in less than 18 days. There is little difference in average sale price between eastern and western districts; both being around $740-750,000. Condo inventory continues to be problematically low being less than 1.8 months, with average days on market coming in at 22 days. Clearly condos are still the hottest property on the market. As a final point, we seen quite a few price reductions in many areas of the city and even the GTA. This again would seem to point to buyers becoming more discerning in their purchases.
CONCULSION
With all of the information we have above, we should really feel good about this current market. We’ve reached a stage where we can look at the market going into 2018. 80,198 total sales for the year were reported at end of October. Chris expects just over 90,000 for all of 2017. If that's the case, this would be 3rd best year of the TREB, so what’s wrong with the market exactly?
We'd love to know where you are in the market and how you feel about what's happening. Do you agree with our assessment or have a different opinion? Contact us directly or leave a comment below!