October 2021: Toronto & GTA MLS® home sales: Something’s gotta give...

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By: JustBungalows

October 2021: Toronto & GTA MLS® home sales: Something’s gotta give...


Toronto, Ontario, November 3rd, 2021 - TRREB - the Toronto Regional Real Estate Board - released it’s monthly stats report, “MarketWatch”, this morning confirming the continuation of a long-standing situation:Chart - 2021-10 Toronto & GTA Home Sales & Average Price by Major Home Type Very strong demand coupled with very tight inventory… and continued calls for the various levels of government to “do something” to help out on the affordability front.

Talking to a twenty-nine year old from the Gravenhurst area yesterday, I asked him what the real estate market there was doing these days. He briefly paused, then said, “That’s a touchy subject with me -- I’m renting.” What he meant was there was no way in that hot place he can afford to buy a home right now. Even though he earns an above-average income.

The Big Picture

Realtors® in Toronto & The GTA / Greater Toronto Area reported 9,783 residential property sales overall - which includes all property types & styles across all of TRREB’s market area - through their MLS® system on Chart - 2021-10 Toronto & GTA Home Sales YoY Summarythe month. While that’s a 6.9% drop versus last October, it was still the second highest number of sales for “Octobers” (2nd only to last October!) in spite of the lack of inventory. Overall, the average sale price was $1,155,345, up nearly 20%. September, 2021’s overall figures: 9,046 homes sold at an average of $1,136,280. All figures quoted herein are year-over-year comparisons unless otherwise specified.

Bungalows all over Toronto, The GTA, and points beyond continue to be extremely popular as “matures” & empty-nesters move into downsizing mode. The issue there is - shocker - lack of inventory… so those folks aren’t listing their homes for sale: They have nothing to buy. #RealEstateGridlock

Specific Numbers

In “The 416” (area code) - Metro Toronto - there were 1,061 sales of Detached homes reported, down 13.1%, at an average of (gulp) $1,784,979, up 21.2%. The balance of the GTA - “The 905" (area code) - saw 3,218 sales of Detached homes, off 19.9%, averaging (gulp 2.0) $1,459,803, up just shy of the thirty percent mark. Wow. I really feel for the “kids”.

Sales of Condo Apartments were strong across TRREB’s market area. “T.O.” saw 1,913 reported, up 33.7%, at an average of $739,647, up 10.6%. Nearly three-quarters of a million for a Toronto Condo. Geez. The rest of the Greater Toronto Area had 986 units sell - a 20.5% rise in activity - averaging $633,951, up an even seventeen percent.


TRREB President Kevin Crigger: “The only sustainable way to address housing affordability in the GTA is to deal with the persistent mismatch between demand and supply. Demand isn’t going away. And that’s why all three levels of government need to focus on supply. The federal government has stated that collaboration with provinces and municipalities is required. This collaboration could be spearheaded, at least in part, with housing-related incentives tied to federal infrastructure investment.” (Bolding added)

TRREB Chief Market Analyst Jason Mercer: “The tight market conditions across all market segments and areas of the GTA is testament to the broadening scope of economic recovery in the region and household confidence that this recovery will continue. A key part of future economic development in the GTA will be the ability to provide adequate ownership and rental housing supply so that people can continue to move to the region to live, work and spend money in the local economy.”

We’re not big fans of government interference in markets. In fact, many argue that that’s exactly what got us into this problem in the first place - at least in part.

On Inventory...

As noted many times before, we view the “Total Active Listings” figure as significantly more relevant than the “New Listings” figure. The former’s “purer” in that it’s an overall snapshot of what’s available. The latter figure can mislead in that it includes homes that were on the market but where the listing was “terminated & re-written” - often coincident with a price adjustment, though sometimes simply to “freshen up” the listing for a home that’s been on the market for awhile without selling. It’s also often used in cases where a home is listed as “holding offers” (A.K.A a “bidding war”) that didn’t produce results the seller was looking for -- so the home’s “re-listed” in many of those instances as well.

Total Active Listings stood at 9,191 as of month-end. Down nearly 50%. With demand crazy-strong. Like the heading says: “Something’s gotta give”. Affordability’s fallen though the floor… and interest rates have been getting up off the mat. Hmmm…

I attended a conference at which Tim Hudak - former MPP;  current CEO of OREA - the Ontario Real Estate Association - presented an update of the Ontario residential real estate market including these two charts… self-explanatory:

Chart - Ontario Home Inventory Historic - Hudak

Chart - Ontario Annual Income Historic - Hudak

Note that second chart: The after tax income required to carry a GTA home is 67.7%. Experts (including, perhaps most importantly, the mortgage lenders) recommend spending only 30% of after tax income to carry a home. Another "Hmmm...".

“Forward Inventory” gives us an idea of how long it’ll take to sell all the homes that are currently listed for sale on the MLS System. It’s calculated by dividing “Total Active Listings” by the month’s Total Sales and, of course, it continues to fall. At month-end, that was .79 months… about three and one-half weeks… 24 days. Not a lot. And remember that much of that inventory is Condo Apartments in a market where people still crave space, whether pandemic-driven or otherwise. 

One year ago we were at 1.64 months of “Forward Inventory”. Two years ago: 2.54 months. A decade ago - in late 2011 - 2.8 months.

As you can see from this chart, we’re going to need a very significant rise in inventory to reach a “Balanced Market” let alone a “Buyer’s Market”...

Chart - Seller's Market vs Buyer's Market

The “Absorption Rate” indicates the speed at which the market’s “absorbing” new listings in the form of sales.Chart - 2021-10 Toronto & GTA Home Sales Historic Annual & Monthly Stats That’s calculated as the month’s sales total divided by the number of homes listed for sale during the month (“New Listings” as opposed to “Total Active Listings” which - obviously - includes homes listed but not sold in prior months). That was .67 for October.

Again not surprisingly given that Supply / Demand situation, homes sold “23.5% faster” than the year-earlier period at just 13 days on the market on average (17 days last October).

Thank-you again for stopping by...


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