The State of the Resale Housing Market in the GTA

Following up to a post from January of last year, I wanted to publish an updated article covering the state of the resale housing market in the region as of April 2019.

The first chart, immediately below, shows the average resale price of all home types by region for every month since January 1996.

AllHomesAll

Many are well aware that resale house prices peaked in Spring of 2017, and following the introduction of the Fair Housing Plan and the Stress Test, have come down quite a bit since then. However, not all regions and housing types faced the same change in values since 2017.

For example, the chart immediately below shows values for Condos and Ground-Related homes (i.e., singles, semis and townhomes), and what we clearly notice is a diverging trend since Spring 2017. And unpacking new construction vs. resales is worthwhile here. Very little new low rise product is being brought to the market, while the pre-construction condo market has lately experienced robust growth and rapid price appreciation. For example, $ per square foot values of $1,000 to $1,500 is not uncommon to see in Downtown Toronto today for new construction condos.

CondosVSGR

Turning to changes in resale house values by geography, what we see in the chart below is that York and Simcoe Regions faced the brunt of the declines (since April 2017), while Peel and Toronto continue to exhibit relative resilience.

ChangeAll

However, there is a very important caveat here – it is ground-related housing that faced the biggest declines in York (and in other regions) – as shown in the chart below. Condo values in York are actually up since 2017 peak, and just slightly higher than the GTA average.

ChangeCondosGR

Turning towards Months of Inventory (which is determined by dividing active listings by sales in a given month, and generally shows how long it would take to sell current homes if no other homes came on the market), what we see is quite a divergence between condos and ground-related homes, particularly since the great recession. Although MOI generally declined between 2012 and 2017 for both housing types, the market for ground-related product was evidently more robust than condos. Since Spring 2017, there has been a reversal, with the condo market leading the way.

MOI

When you break down MOI by geography (for all housing types), once again, York and Simcoe Region come up as the laggards since Spring 2017. What I found particularly interesting about the chart below is how Simcoe deviated significantly from its historic MOI norm between 2015 and 2017.

MOIGEO

With respect to sales levels, some very interesting findings are evident between condos and ground-related housing from the chart below. What is clear (and shocking) is how ground-related 2018/2019 sales levels have been sent back to the late 90s/early 2000s! Condos on the other hand are currently exhibiting sales levels similar to those of 2013/2014.

Saes

Finally, I want to turn my attention toward monthly change in average house price by type for every region since Spring 2017. What I see is remarkable stability in house values over the last 1.5 to 2 years.

The first chart immediately below shows monthly values of ground-related housing since March 2017. What is clear is that following that immediate major drop during the Spring/Summer of 2017 (between April and August) ground-related house values have been very steady. For instance, ground-related homes in Toronto and York Region have not fallen below the $1M threshold; in fact, you have to go back to winter and spring of 2016 to see average ground-related values of less than $1M. Similar trends are evident in Halton, with homes not dipping below $900,000, and Durham and Simcoe, where homes stabilized around $600,000 since Spring/Summer 2017.

GR17

And condo values, which are shown in the chart immediately below, have in some cases actually increased from their Spring 2017 levels.

C17

If you need further proof of the stability present in our market (and in some cases a recovery), the chart below shows it quite clearly. What is shown is the difference in change in all house values (in %) between the immediate drop in 2017 (April to August) and the drop from April 2017 to today (as of April 2019). What I was interested in finding out was – did prices continue to fall following the first immediate drop in values in 2017. What we see is that all regions with the exception of York and Halton have been recovering from that immediate drop during 2017, with Toronto and Peel running away with it.

ChangeAll20172019


Some key takeaways:

  • The resale market has exhibited a remarkable level of stability since Spring 2017 (when we look at home values for both condos and ground-related product)
  • The only real concern (for the resale market) I would note are relatively low sales levels for ground-related housing, which could impact prices – but so far this has not proven to be the case, as ground-related values have been very stable for almost 24 months straight. We have actually achieved the policy-makers long awaited dream of a soft-landing in the housing market (even though that was primarily the intent of the Fair Housing Plan).
    • And this could be a good thing as it helped ground people (pun intended) in recognition that home values cannot and should not be going up 20/30% annually. That is not healthy for anyone and won’t end well for those who purchased at peak
  • The other concern for the market may be prices of new construction condo units – but this is something not covered in this article.

Last year I ended off my post by emphasizing confidence in the long-term trajectory of the Toronto region. I still remain bullish. However, I also noted that I was unsure what step the market would take in the next 5 to 10 years. And I’m still not sure, especially given the recent macro-economic climate and what happened to the stock market and equities during late 2018. But after tracking TREBs data since Spring 2017 and seeing the stability in resales month after month, I feel more confident today than I did during January 2018 in our resale market for the short to medium term.


Have questions about the market, want to see custom-run data-sets, or wondering where and what to buy/sell or lease? Do not hesitate to reach out here for more information.

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