The Toronto Real Estate Board (TREB) released its monthly resale report for January 2018, announcing a big dip in sales in the Greater Toronto Area (GTA) compared to last year.
One of the things Ben Myers, President of Bullpen Research & Consulting Inc., told us to watch out for this year is the misinterpretation of data.
Data being released early this year is being compared to record highs last year, and most headlines won’t and can’t provide the context needed to form an educated opinion on the state of the market.
TREB released this data yesterday and here are a few of the headlines that were published immediately:
We just got the first real picture of the Toronto housing market — and it’s ugly (Financial Post)
Toronto home sales fall sharply in January (The Globe and Mail)
Toronto home sales plunge 22% in January amid new mortgage rules (BNN)
We’re not knocking these articles, but there are a lot of people out there who only read headlines and neglect diving into the numbers to gain a better understanding. It’s easier and quicker to draw conclusions from a cursory scroll.
According to TREB’s findings, there were 4,019 sales reported through the MLS last month, which is 22% lower than the record high set in January 2017 (5,155 sales).
If you look back at January 2016, TREB reported 4,672 sales. With three years taken into consideration, this 22% year-over-year drop looks more like a market balancing out.
As sales dropped, new listings increased by 17.4% year-over-year, which is a good thing because the resale market was in need of supply. That said, January 2018 was still the second lowest January for new listings in the last 10 years.
“TREB released its outlook for 2018 on January 30th. The outlook pointed to a slower start to 2018, especially compared to the record-setting pace experienced a year ago,” says TREB President Tim Syrianos. “As we move through the year, expect the pace of home sales to pick up, as the psychological impact of the Fair Housing Plan starts to wane and home buyers find their footing relative to the new OSFI-mandated stress test for mortgage approvals through federally regulated lenders.”
The average selling price dropped 4.1% to $736,783. The only housing type to see an increase was condos, which went up 14.6% to $507,492.
“It is not surprising that home prices in some market segments were flat to down in January compared to last year,” says Jason Mercer, TREB’s Director of Market Analysis. “At this time last year, we were in the midst of a housing price spike driven by exceptionally low inventory in the marketplace. It is likely that market conditions will support a return to positive price growth for many home types in the second half of 2018. The condominium apartment segment will be the driver of this price growth.”
Overall, it looks like the GTA’s resale market is adjusting after a year of record high sales and soaring prices. We’re interested to see if the new home market is adjusting in a similar fashion!
Stay tuned, we’ll be reporting on the Building Industry and Land Development Association’s (BILD) findings as soon as they’re released later this month.