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Toronto’s Real Estate Problem: Simple Supply & Demand

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Who says the summer is slow?

I don’t know know if there were more than three or four other blog posts that solicited such a great response as this topic of “Supply & Demand” from last August!

Recall that the conversation centred around supply and demand, and the effects this had on the market, specifically price, but also looking at how quickly properties are selling.

We looked at five things: active listings, new listings, average days on market, total sales, and average sale price.

We looked at January through July.

So let’s expand those numbers through to the end of the year, and before we look at 2016, let’s first look at 2014 and 2015:

2014-Updated

Interesting that in 2014, the decrease in active listings were the highest to start and end the year, and the fall wasn’t as bad as the spring.

The increase in average sale price seemed to have peaked in the spring, and then remained somewhat flat, between 7-9% from May through the end of the year.

I assure you that both of the above were not what we saw in 2016.

As for 2015:

2015-Updated

We actually saw a smaller decline in active listings in the fall market – only 7-8% in Sept/Oct/Nov, which is the busy fall market, compared to 10-13% in April/May/June, which I’d say is the equivalent busy period in the spring.

But 2016 was just a different animal all together, take a look:

2016-Updated

When I wrote the blog in August, we were looking at the July numbers – which peaked with an insane 31.9% drop in active listings.

We didn’t really predict what was going to happen in the fall, but you might have thought that with the “slow summer” market, the active listings would return to a level around that -25% mark in the early spring.

I, for one, did not expect the decline to continue, culminating with an absolutely ridiculous 48.1% year-over-year decline in active listings in December!

As for average home price, most people did think the 16-something-percent increase in year-over-year home price that we saw from April through July would be the high water mark.

In the end, we saw a 20% floor in the fall, with the monthly average peaking at a 22.7% increase in November.

It was just nuts.

Here’s how the active listings look over the past four years:

ActiveListings-Updated

And sales, which of course, went the complete opposite direction:

Sales-Updated

Now here is the most impressive (or most depressing) graphic of all.

Call it what you want, but it’s certainly the most eye-opening; it tells the largest tale.

Looking at the decrease in active listings from 2013 to 2016, each month of the year:

1

Look at December!

There were 11,418 active listings in December of 2013.

There were 4,746 active listings in December of 2016.

Isn’t that crazy?

The decline is staggering.

And sales are up each and every month, with a midpoint of around 30%.  I don’t know what’s going on in July – if that’s not the very definition of an “outlier,” then I don’t know what is.

But I look at the list of “active listings” above, reading from January to December, and I see 20%’s, 30%’s, 40%’s, and 50%’s.  It just gets worse, and worse, and worse.

Fewer people are selling in Toronto.

But more people are buying.

The math doesn’t add up, and if I said “something has to give,” I’d be too late.

What’s given, is the average home price, as “the levy has already broke,” and the flood happened last year.

Will it continue?

That is the question as we try to get an early feel for the 2017 market.

Sales are trickling through so far, and thus it would be premature to give you any indication whatsoever.

Give me another 7-10 days, and I’ll let you know what kind of market we’re in.

Content originally appeared at: http://torontorealtyblog.com/