A client of mine forwarded this very cool interactive flash-based chart from The Economist. It shows the house price index, actual house price movement for several countries over the past 20 years.  (The above is just an image of the actual chart. I have embedded the actual flash chart in my blog. Click ‘Continue Reading’ to try it.)

It is interesting to see how Canada’s house prices stack up against other countries over the last 20 years. The same old story holds true: since 1990, Canadian real estate has been very boring. Appreciating at very modest but steady rates compare to the huge ups and downs of several other countries. Our downturn we experienced last year was nothing compared to other countries. This is disappointing news to the doomsayers who fervently believe we are constantly heading for a massive market ‘correction’.

The Toronto real estate market has undergone such a massive turnaround over the past 3 months I wouldn’t doubt that we will look back on this as an historic event. I’m not saying things will forever be blue skies and sunshine for Toronto real estate investors and home owners, but its clear that in the past 12 months we have witnessed 2 seismic shifts. The first happened in October 2008 when the market began to free fall, and then the second occurred around May 1st when buyers came out of the woodwork in droves and ate up every available listing in sight, sending prices sky rocketing.

I’ve been talking a lot lately about supply and demand on this blog. The figures are staggering over the past few months. It is becoming increasingly difficult for the analysts and economists to explain what has happened in this city over this relatively short period of time.

Rather than try to add more words to the discussion, I found a great visual display over at guava.ca that illustrates what I’ve been talking about. Take a look through the charts found on this great site and see how the last 12 months compares to activity over the past 5 years. Look at the “V” shape for the total months of inventory. Very revealing.

chart from guava.ca

It’s that time of the month again, TREB just released their stats for February. The numbers aren’t as painful to look at as in the previous few months, but does this mean we are on the way to recovery?

Compared to February 2008:

• In C01 (downtown west), condo sales are down 31%, average prices are down 8.5%, and inventory is up 46%. The number of sales as a percentage of active listings was 19% versus 40% last year.
• In C08 (downtown east), condo sales are down 9%, average prices are down 13%, and inventory is up a 85%. The number of sales as a percentage of active listings was 29% versus 59% last year.

Everything is still down over last year, but the drop is not nearly as extreme as it has been over the past few months. The trend has been double the inventory and half the sales, with average prices down 10-12%. So what exactly is going on here?

 

• Total inventory is actually down slightly in both C01 and C08 compared to January (last month). Normally we would expect inventory to increase as the weather warms and the spring market approaches.
• How about C08? Sales are down only 9% over last year (compared to 32% and 45% over the last two months respectively), and median prices are down only 7% (compared to 9% and 8% last 2 months). 
• Compared to 2007 numbers (2 years ago), average and median prices in both CO1 and C08 are still up significantly

 

So what is up? Is the market showing strength and signs of recovery? Maybe. My feeling is the appearance of postive change is mostly attributable to the fact that February 2008 was the first month where we started to see a dip in the market overall. Sales began to slow and inventory started to climb. February 2008 was also the first month that the Toronto Land Transfer Tax kicked in as well.  In short, we will have to wait to see a few months worth of data before we can say the market is trending up.

Download a PDF file with all the stats for February.

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Realnet has released the sales figures for new condos for the month of January. Prices are still increasing despite the fact that the number of sales continues to be significantly lower than a year ago.

Prices are up 8% for high rise condos while sales were down 64% compared to January 2008. 

The average selling price of a high rise condo was about $388,000 in January 2009, compared to $358,000 a year earlier. The number of sales however went from 508 in the City of Toronto last year to just 184 this year for the month of January.

Even though prices are still ‘going up’ the writing is on the wall and this trend cannot continue indefinitely for new condos. We saw this in the resale market where first the number of sales dropped off, and then a few months later prices followed.  Last month prices were up 10%, this month they are only up 8%. Probably in about 2-3 months prices should statistically flatten out while in reality with the various incentives builders are now offering, prices will finally start to dip a little.

It will be very interesting to start seeing the numbers in both the resale and the new development markets for the month of February because February 1, 2008 was when the Toronto Land Transfer Tax kicked in and so we can do more of an apples to apples comparison to get a truer idea of where the market is at. 

What are your thoughts? I always appreciate your feedback. Leave me a comment below or send me an email via my contact page.

All stats from Realnet. Full report download: Realnet New Homes Market Report January 2009. **REPORT REMOVED DUE TO COPYRIGHT CLAIM BY REALNET CANADA INC.**

TREB has their January stats up for resale properties. Looking at the numbers for downtown condos it is now very clear: we are in a serious buyer’s market. 

Compared to January 2008:

• In C01 (downtown west), condo sales are down 58%, average prices are down 9.5%, and inventory is up 70%. The number of sales as a percentage of active listings was 12% versus 46% last year.
• In C08 (downtown east), condo sales are down 32%, average prices are down 12%, and inventory is up a staggering 116%. The number of sales as a percentage of active listings was 19% versus 60% last year.

So the story continues as we have seen for the past three months. Prices are down about 10%, sales are about half of what they were last year. DOM (days on the market) has gone up nearly 100% (27 days last year for C01 and C08 versus about 45 days this year). This underscores how much of a buyers market it really is out there. Even if sellers have price their condo with the 10% deduction from last year built into their price, they are still finding that it takes much, much longer to sell than it did a year ago.

Click on the PDF icon to download the full stats package for the month for downtown.

Previous posts in this series:

Jan 2009 Downtown Condo Stats

[**CHART REMOVED DUE TO COPYRIGHT CLAIM BY REALNET CANADA INC.**]

The final sales figures for new condos from Realnet are in for the December and the year 2008. In short, prices are still going up, while sales have dropped off significantly. [Note: these numbers are for new condos. For resale condos, see my previous posts for more stats on the downtown condo market.]In 2007, over 23,210 new condos were sold in Toronto (GTA). A record year-by a long shot. In 2008, 15,239 units were sold, representing a 34% decrease in the number of sales.

Taking a look at just the month of December, sales are down an astounding 81% year over year. In December 2007, 1024 units were sold versus 198 in December 2008 (GTA).

Yet despite the number of sales falling off a cliff, prices for the month of December year-over-year are actually up over 10% for high-rise condos. This is pretty much the exact opposite of what we have seen in the resale market where average selling prices are down about 10-11% for downtown condos. 

[**CHART REMOVED DUE TO COPYRIGHT CLAIM BY REALNET CANADA INC.**]

 

How can this be? Unsold inventory is climbing in the new condo market just as it is in the resale market. Shouldn’t the weight of all this inventory put downward pressure on prices? The answer of course is yes, but most developers are not yet facing dire circumstances where there is any need to reduce prices.

Developers have one tool in their arsenal that individual consumers in the resale market do not: they can reduce supply at any time, thereby easing the downward pressure on prices. Very few new developments will be introduced to the Toronto market in 2009. Most that were planned have been placed on the back burner. Developers will be focusing on selling the units they currently have in the pipeline, getting financing to build, and completing construction as quickly as possible.

That being said, whereas 6 months ago there was absolutely no negotiating the list prices of new condos, my personal experience of late suggests discounts of $5,000-$10,000 off of 1 bedroom or 1 bedroom + den units or $15,000-$20,000 off of 2 bedroom units can be fairly easily negotiated at most new developments.

Below are two more interesting charts, one showing total figures for new home sales in the GTA and the other shows the monthly new home sales for the past few years broken up by high-rise (condo) and low-rise (homes).

  [ **CHART REMOVED DUE TO COPYRIGHT CLAIM BY REALNET CANADA INC.**]

What are your thoughts? I always appreciate your feedback. Leave me a comment below or send me an email via my contact page.

All stats  from Realnet. Full report download: Realnet New Homes Market Report December 2008 **REPORT REMOVED DUE TO COPYRIGHT CLAIM BY REALNET CANADA INC.**

Finally the numbers are in. TREB took a lot longer than usual to release the final sales numbers for the month of December, maybe because they were so painful to look at they had to double check them several times, hoping they would magically improve themselves. Here are all the gory details.

Compared to December 2007:

• In C01 (downtown west), condo sales are down 49%, average prices are down 10%, and inventory is up 76%. The number of sales as a percentage of active listings was 14% versus 48% last year.
• In C08 (downtown east), condo sales are down 45%, average prices are down 10%, and inventory is up a staggering 180%. The number of sales as a percentage of active listings was 20% versus 101% last year (not a typo-Q4 2007 was absolutely crazy!).

So if we just stopped there the numbers would be very similar to what was reported for the month of November, but there is something else very significant happening which will likely not be reported on much in the news media. Check this out:
Compared to November 2008 (last month):

• In C01, condo inventory has decreased by 26% (843 listings in November vs. 667 in December)
• In C08, condo inventory has decreased by 29% (359 listings in November vs. 254 in December)

Let me preface this by saying that it is normal for inventory to drop between the months of November to December as it is well known that December is not the best month to be a seller. However, this could be a sign of what many are fearing:

Sellers are holding off en masse to re-list their properties in the spring. Some believe that the market will be flooded with listings this spring and that will be when it really ‘hits the fan’. Time will tell.

So what do the latest numbers mean to you?

1. For Buyers – Prices are down, but not everywhere. Median prices have not changed all that much. Shop for bargains now but understand that there is no rush as Spring could bring surplus inventory. 
2. For Sellers - If you couldn’t sell your condo in the fall and are planning on relisting this spring, you might want to speed up the process and go to market now to try to avoid the rush to the gate.
3. For Investors - Stick to the fundamentals. Look for properties that have been on the market the longest and offer the chance at positive cash flows.

Dec 2008 Downtown Condo Stats

 

Previous Posts in This Series:

 

• October 2008 Condo Market Update: “Is the Toronto Condo Market Crashing?”
• November 2008 Condo Market Update: “Tipping Point? Downtown Condo Prices Fall, Inventory Soars”

The numbers are in for November and it isn’t pretty.  TREB just released their sales figures for the month of November and unlike last month, we can now say that for the resale downtown condo market, prices have fallen.  Let’s just get right into the numbers.

Compared to November 2007:

• In C01 (downtown west), condo sales are down 61%, average prices are down 11%, and inventory is up 90%. The number of sales as a percentage of active listings was 13% versus 64% last year.
• In C08 (downtown east), condo sales are down 51%, average prices are down 9%, and inventory is up a staggering 164%. The number of sales as a percentage of active listings was 15% versus 83% last year.

Compared to October 2008 (last month):

• In C01, condo inventory has increased by 6% and sales decreased by 40%
• In C08, condo inventory has increased by 15% and sales decreased by 41%

Upon first glance it looks like this must be the crash taking place that the pundits have long been predicting. Possibly, but let me point out a couple interesting facts:

• In C01, average prices of condos were down 11%, but the median price was down only 3%.
• Similarly, in C08, average prices of condos were down 9%, but the median price was down only 3%.

What am I getting at here? If you believe that the median price is a more accurate measure of the volatility in the market, then things aren’t as bad as they seem. Or another way to look at it is the numbers from 2007 were skewed because of the disproportionately high number of sales of high-end properties (people rushing in to buy before the Toronto Land Transfer tax kicked in). John Pasalis of Move Smartly is a proponent of this theory and has written a couple posts about this here and here. 

So what do the numbers from this month mean?

1. For Buyers - December could be good month for you. With about 1200 available condos to choose from in the downtown core (versus about 600 last year), and very few buyers to compete with, the time is now to put in that low-ball offer you could only dream about just 3 months ago. 
2. For Sellers – This would be a good time to take your property off the market if you don’t absolutely need to sell. Consider trying your luck again in the new year, but be warned, there may be hundreds of others who will use the same strategy.
3. For Investors – The resale market is suddenly looking more promising. “Positive Cash Flow” is no longer an impossible dream. Buying in a market like this is not for the faint of heart, but go out and find the desperate corners of the market and you may be rewarded.

Nov 2008 Downtown Condo Stats

 

If you haven’t already, check out my post from last month with a similar look at the downtown condo numbers entitled: “Is the Toronto Condo Market Crashing?“

We are in the midst of a global financial crisis. People are naturally concerned about their jobs, their finances, their investments, and of course – REAL ESTATE. I am getting asked constantly by friends, family, and clients:

How is the market? Are prices coming down? Is the Condo Market Crashing?

I’m not an economist or any sort of a pundit, but I do want to share with my readers a few interesting statistics on the DOWNTOWN CONDO MARKET. I don’t want to talk about the GTA numbers, or even the City of Toronto numbers. These have been well publicized over the last 24 hours in every major media outlet. They aren’t good.  Sales are down 35% and prices are down 10% (GTA wide). I work downtown, I live downtown, if you are reading this you are probably only interested in downtown real estate, so let’s talk downtown condos and see what we can find out about the market.

I get plenty of visitors to my website every week who are doing Google searches for things like “Condo Market Crash Toronto 2008“. The media is overloading us with messages that the real estate market is crashing all over Canada and the Condo market is going to be hit hardest because after all, there are far too many condos in Toronto, right?

Sorry to disappoint you, but the numbers just do not support this – yet. What I’m going to share with you will probably surprise you given the constant barrage of media headlines saying the sky is falling on the condo market.

The truth is that prices of condos in both C01 (downtown west) and C08 (downtown east) are actually UP compared to October 2007.

• Average price of a condo in C01 in Oct 2007 was $334,127 versus $346,344 in Oct 2008.This represents a 3.6% increase.
• Average price of a condo in C08 in Oct 2007 was $326,466 versus $339,100 in Oct 2008. This represents a 3.9% increase.

BUT – most interesting, these price increases are happening in spite of the fact that the number of sales are down significantly…

• Number of condo sales in C01 in Oct 2008 was 184 versus 287 in Oct 2007 – a decrease of 36%.
• Number of condo sales in C08 in Oct 2008 was 94 versus 120 in Oct 2007 – a decrease of 22%.

…and the number of listings have absolutely soared compared to a year ago.

• Active condo listings in C01 are up from 454 to 793 – an increase of 54% in 2008 versus 2007.
• Active condo listings in C08 are up from 147 to 313 – an increase of 113% in 2008 versus 2007.

So what does all this mean?

1. For Buyers – if you are looking to pick up a downtown condo at pennies on the dollar you’re out of luck. But the soaring inventory levels can’t be ignored.  There will be downward pressure on prices as we enter the traditional ‘slow season’ in real estate – November, December, and January.
2. For Sellers – well priced listings can expect to take at least 1 month to sell. Over priced properties simply will not sell in this market – especially as we approach the slow months. Please don’t make the mistake of over-pricing your property!
3. For Investors – be patient. Watch the market carefully and you will be rewarded. As Warren Buffet says, buy fear and sell greed. I think we will see some fear this winter in the resale condo market.

Click on the icon below to download a PDF file with all these stats and a couple of charts. I always appreciate your feedback and thoughts. Send me an email or leave a comment.

Oct 2008 Downtown Condo Stats