September 2019 charts: Freehold volumes normalizing
Wednesday Oct 23rd, 2019
Here's your Toronto real estate market report for September. It's the sixth month in a row that GTA-wide sales volumes are up by double-digits versus last year
> April +16.8%
> May +18.9%
> June +10.4%
> July +24.3%
> August +13.4%
> September +22.0%
But keep in mind last year's 78,020 sales were the lowest total since 2008. You know we like to dig a little deeper here.
Below is what I saw in the September stats. As always, these are just selected highlights. The full set of market charts is available on SlideShare.
1) The return of sales volumes
Okay, I had a section in last month's results with the exact same title. It still looks true, but here's a new wrinkle - this is the first time that 416 freehold sales have been above the 7-year moving average since (dun dun DUN) April 2017.
Condo volumes, though mostly dipping below the 7-year average, have popped above a half dozen times since April 2017 so it's less of a big deal for those.
2) Full year volume prediction
To be fair, in May and June results blogs I also talked about the return of lowrise (freehold) sales. The media has been screaming headlines like "September home sales up 22% in September" but while year-over-year (YoY) definitely has value, it's not the be-all and end-all. If I told you today's temperature is 5° warmer than last week, that's nice to know. But if that was an increase from 0° to 5° and the average for today for the last 10 years is 15° then that 5° increase still leaves us cold, doesn't it? This is why I pointed out the rise above the 7-year average in the first point, because that gives more context than just "up a whole lot (compared to a terrible year)!"
The 2018 final sales volume number for TREB (basically GTA, of which Toronto is has been 36% to 39% of in the last 3 years) was 78,018. That was the lowest since 2008 (74,552). We are at 67,957 so far this year to the end of September, which is about 7,900 ahead of last year. Taking into account the last 6 months have been up in double-digits versus last year, I'm projecting a final 2019 TREB volume of around 88,000 sales.
That would put it still behind the 2014 -16 run-up and the 2017 come-down, but in line with 2009 to 2013 numbers. As the population is increasing you'd expect this to edge upwards. That is if more housing units are built and available to be re-sold as TREB only measures re-sale housing transactions through its MLS. If this 88,000 prediction holds true, the 12.8% YoY increase would be the highest since 2009 (17.1%).
3) Freehold old over asking back up
Sold over asking (as percentage of monthly transactions) has been higher than last year for freeholds in 8 of the 9 months. That's cool. But what was of significance in September was that the freehold number reached the 5 year average for the month (42%). That hasn't happened since May 2017, when things were coming off of a crazy high.
Condos haven't had the same problem beating the 5-year average, since the bidding war landscape is a lot different in that segment than it was 5 years ago when inventories weren't as tight as they've been the last few years. But what's significant in condos is they've been ahead of last year in each of the last 3 months.
As always, you will find the full set of market charts (for this month and archived prior months) on my SlideShare.