September 2017: Market update

September has brought a more balanced market for freehold homes. In a continuation of what we’ve seen through July and August, the number of listings is up, sales are down and sale prices have remained steady in comparison with year-over-year stats. Many of my clients who are looking to buy have commented on the increased supply in the last month. And while some believe this is a great time to buy because of it, others are still hesitant due to the uncertainty in the market.

The number of listings are up by 9.4% year-over-year – a key indicator in the supply and demand of the market. This, in combination with buyers waiting on the sideline, is the reason for the greatest supply we've had in many years. Buyers have choices and many sellers are having to wait longer to get a suitable offer on their property. The average sale price in September was $775,546, up only 2.6% compared to September 2016. The increased supply and buyer hesitation is the main contributor for the small increase.

The condo market on the other hand is quite strong. Average price of a condo apartment in the GTA in September 2017 is $520,411 and in September 2016 it was $422,002. This is an increase of 23% year-over-year. In the last few weeks I’ve seen condo units get as many as 10 offers and sell for $50K – $80K over asking price. Many Torontonians are still priced out of the housing market and are turning to condos. This means tighter market conditions, multiple offers and higher sale prices.

Client Q&A: Is now a good time to sell my home?

Is it Now or Never?

Is now a good time to list your home for sale? It depends. July and August are typically slow months. Kids are home from school and people go on vacations, so we see fewer listings in these months than in the Spring and Fall markets. Some people believe that less homes on the market means less competition. Others believe that buyers are taking a break so they’ll get less activity on their home.

As always, I tell people to focus on their personal situations as opposed to the market, which we cannot predict. If you are in a rush and need to buy and sell quickly, then now may be a good opportunity. If you can afford to wait,  then September/October may be a more optimal time with activity typically ramping up during those months.

With the housing market getting all the attention these days, the condo market is still very strong. Those who are priced out of freehold homes are buying condos, and this means increased competition. The average price of condos rose from $393,858 in Q1 of 2016 to $489,551 in Q1 of 2017 – a 24.3% increase. Tightening mortgage rules and stress tests are also a contributing factor to rising condo prices due to decreased purchasing power.

Q2 Market Update

The Straight Facts

We began the year with a very hot market. Bully offers, bidding wars and homes selling for two to three hundred thousand over asking was commonplace.

Total home sales in the GTA rose through January, February and March (5,188; 8,014; and 12,077) but began to drop due to the fair housing plan announcement on April 20th. Sales dropped to 11,630 in April (usually sales usually continue to rise until June).

Months of inventory (calculated by dividing total sales by active listings) is the key indicator for supply and demand. January through April was extremely low at 1 month or less. A balanced market will have about five to six months of inventory.  This is the main reason for the frenzied market we experienced.

Average price in the same time frame was also rising with the peak in the middle of April. Prices had increased to $920K, up $150K since January! This was not sustainable and the government stepped in.

The number of sales started to decrease in May and June (10,196 and 7,974), with many buyers unsure of the market and choosing to wait and see what would happen. Sellers thought the market was peaking, and decided it was time to sell. As as result, inventory rose to 18,477 in May and 19,680 in June. Unfortunately, no one knows we’ve reached the peak until prices start to fall.

May and June saw many houses receiving less interest than expected as many buyers put their searches on hold. This caused months of inventory start to go up (1.8 and 2.5) and buyers now had more to choose from. Supply and demand was beginning to stabilize which caused average price to decrease ($863K and $793K).


The 16-point plan and beyond...

Seeing into the Crystal Ball

The real estate market for freehold homes has cooled significantly over the last few months. Since the government of Ontario introduced the 16 point plan many buyers have chosen to put their search on hold. Less buyers mean less bidding wars.

At the beginning of the year, almost all homes that were aggressively listed were generating multiple offers. But times have changes. These days, when five houses are listed in the neighbourhood in the same price range, the best one shines while the others sit on the market (sometimes for weeks or months). We’re seeing lots of price changes too—increases on failed bidding wars, and reductions when no offers come in.

Sellers are having to adjust expectations because February and March prices are long gone. Unfortunately, we don’t know we’re at the peak until prices fall, and we won’t know we’re at the bottom until prices rise. Many claim to be able to predict the market, but no one can.

At this point, listing low and selling high usually backfires. Most buyers are tired of the bidding wars and there is plenty of inventory so they can choose to wait. I’ve been advising my clients to list at a price they are willing to accept.

What I tell my buyer clients is the same thing I’ve told them since I got into the business: If you’re buying your first property, it has to be a home, not just an investment. If you’re planning on buying something and flipping it in the next couple years, now is not the time.