August 2022: Toronto & GTA MLS® home sales: Cue the economists
Tags: BUNGALOWS, TORONTO, GTA, GGH, ONTARIO, PRICES, SALES STATISTICS
Greater Toronto, Ontario, Sept 2nd, 2022 - MarketWatch, The Toronto Real Estate Board’s monthly statistical report, was released this morning showing that August’s market activity represented a 34.2% drop from last August while prices remained almost unchanged, on average. Inventory as well as the time it took to sell a home in Toronto and the Greater Toronto Area were both significantly higher. All figures herein are year-over-year comparisons unless otherwise noted.
Toronto & GTA Realtors® reported 5,627 residential sales overall - meaning all TRREB areas and all types of home - through TRREB’s MLS® system last month compared to 8,549 in the year-earlier period. The volume of sales was down across the board. Prices in the low-rise sector were generally negative while Condo Apartment prices actually climbed somewhat. Townhomes were also eked into the “plus column” as far as average prices went.
Specific Numbers by Home Type
In Metro Toronto - “The 416” area code - 511 Detached homes were reported sold, off an even 26%, averaging a sale price of $1,648,298, down 1.7%. In “The 905" area code - the balance of the GTA - 2,084 Detached homes were reported sold on the month, down 30.3%, at an average of $1,313,839, off 3.7%.
Condominium Apartment sales were also down significantly though, as noted above, volume weakness wasn’t reflected in average prices: Metro Toronto saw 1,028 Condo Apartments trade, off 40.6%, at an average of $736,940, up 2.6%. In the rest of the Greater Toronto Area, 479 sales were reported, down 40.5%, for an average $656,339, up 6%...the most positive sales figure in the report.
The number of homes newly listed in August was down just seven tenths of a percent 10,537. The more relevant stat - Total Active Listings - however, was up 62.3% to 13,305. Clearly, inventory is not the core problem as we’ve noted here many times previously.
It comes as no shock that homes took “37.5% longer” to sell at 22 Days on Market on average compared to 16 days last August. Bear in mind that a DoM of 22 is still pretty low by historical standards.
“Forward Inventory” - calculated as Active Listings divided by the month’s Sales Volume in order to give us an idea of how long it’ll take to sell all the homes currently listed - came in at 2.36 months. A year ago - when our statistical blog post carried the title, “...Inventory levels on life support” - it stood at well under a month.
When markets “correct”, it takes many sellers a while to accept that their homes aren’t worth today what they were mere months ago. With many asking prices that are significantly higher than “the new normal” as dictated by more recent sales of comparable homes, buyers back off - naturally. The adjustment tends to take a little while and, ultimately, comes down to a single factor: motivation.
We’re - naturally - hearing lots of news & economic reports about how far the home sales correction will go. Reminds me of an old saying: “If you took all the economists in the world and laid them end to end they still wouldn’t reach a conclusion.” It’s largely a question of interest rates since they directly impact carrying costs / affordability… not to mention employment and the bigger picture.
For the moment, it appears the “top” came in February when Toronto sale prices averaged $2,073,989 for Detached homes; $822,090 for Condo Apartments. In the balance of the GTA those averages were $1,727,963 and $756,146 respectively. So - since February… just six months earlier… those four “average prices” have fallen 20.5%; 10.4%; 24%; and 13.2% respectively.
Kevin Crigger, TRREB President: "While higher borrowing costs have impacted home purchase decisions, existing homeowners nearing mortgage renewal are also facing higher costs. There is room for the federal government to provide for greater housing affordability for existing homeowners by removing the stress test when existing mortgages are switched to a new lender, allowing for greater competition in the mortgage market. Further, allowing for longer amortization periods on mortgage renewals would assist current homeowners in an inflationary environment where everyday costs have risen dramatically."
John DiMichele, TRREB CEO: "The Office of the Superintendent of Financial Institutions (OSFI) should weigh in on whether the current stress test remains applicable. Is it reasonable to test home buyers at two percentage points above the current elevated rates, or should a more flexible test be applied that follows the interest rate cycle? In addition, OSFI should consider removing the stress test for existing mortgage holders who want to shop for the best possible rate at renewal rather than forcing them to stay with their existing lender to avoid the stress test. This is especially the case when no additional funds are being requested."
Jason Mercer, TRREB Chief Market Analyst: "There are other issues beyond borrowing costs impacting housing affordability in the Greater Golden Horseshoe. The ability to bring on more supply is the longer-term challenge. However, we are moving in the right direction on this front. The strong mayor proposal from the province coupled with the recent commitment from Toronto Mayor John Tory to expand ownership and rental housing options are examples of this. TRREB looks forward to hearing additional initiatives from candidates vying for office in the upcoming municipal elections."
If there’s a “supply problem”, we’d suggest it’s specifically within the Bungalow / 1 storey / main floor primary [formerly “master”] bedroom style of home: With the knees of so many “empty nesters” starting to get wobbly and their desire to downsize to smaller homes and fewer stairs, we have trouble keeping up with demand for Bungalows for sale. In fact, it’s not uncommon for these folks to “settle” for split-level homes when they can’t find a suitable single-storey home.
As always, we appreciate you stopping by. Enjoy these waning days of beautiful weather… and start to think about getting the place ready for ol’ man winter!
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