Have you heard some of the latest news in the Toronto housing market? Most headlines say that demand remain high as ever yet sales are plummeting, while prices are skyrocketing. Have you ever felt that most headlines are misleading? If that's the case, let's go back to data we can trust, the actual numbers presented by the Toronto Real Estate Board. From there, we'd be able to deduce what is really happening to the Toronto real estate market.
Source: Toronto Real Estate Board Housing Market (September 2021)
Based on the TRREB MLS Sales chart, sales this year had its downward streak for 5 months in a row since March and then had a slight increase for September. The decline in sales were partly because of skyrocketing prices driven by low listings which made detached homes out of reach for most buyers. Despite the downward trend for a few months, 2021 sales are still higher compared to 2019 which indicates that there is still high demand in the housing market. The increase in sales for September is not surprising, since it's the usual time of the year when homebuyers get busy with fall homebuying season.
Now, let's take a look at the MLS New Listings chart. Here, we can see how the new listings trend for this year is reflected by the sales chart shown earlier. The same downward trend can be observed for the past 5 months only to increase again in September. The sudden increase in new listings might be because of the anticipation for population growth due to immigration as well as growing confidence of sellers to enter the market again as the situation further return back to normal pre-pandemic. In addition, the condo market has seen a boost in listings as people gravitate back to the city for work and more affordable housing options. What can this mean for you as a buyer? If new listings continue to increase, this would mean less multiple offer situations and a slower price growth.
The MLS Sales-to-New Listings Ratio chart compares the numbers in sales and new listings. Here we can see that the chart is moderately flat with the highest percentage in the month of August. August numbers show that there were more sales compared to new listings which contributed to price increase. September ratio looks promising and if things continue to level off for the coming months, then we can expect a generally stable housing market.
When we look at the average resale home price, there were steady increases in the prices until May of last year when home prices surged by 7.22% from $863,599 to $930,869 in June. From then on, home prices have seen dramatic increases because of a couple of factors such as low supplies in the market partnered with high demand due to low mortgage rates.
Since the start of the pandemic, it's undeniable that we have seen fluctuations in the Toronto housing market. It was indeed a cause of alarm, especially when we encounter misleading headlines. But what's really happening to the market? Now we can see from the data that things are slowly starting to level off and get back to normal. This is evident when we look at the entire picture and compare in a year-over-year basis and not just on the preceding months. However, for home prices, the low housing supply is a key problem that needs to be addressed first.
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