LACKIE: September numbers reflect grim time in Toronto real estate

Eighteen months of rising interest rates have pummelled affordability and eliminated a large swath of buyers from the market place

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September was not a good month in Toronto real estate, no matter the spin you might be privy to on social media.

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In fact, with home sales hitting their lowest volume for a month of September since 1996, the Toronto Regional Real Estate Board’s Market Watch, released last week, reported just 4,642 sales for the month, a full 7% year-over-year decline, and a significant fall from the 5,294 reported last month encompassing a 12% drop.

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Wait, wait, wait, someone will cry: prices are up, 3%, in fact, over last year and 3.4% over last month. With the average sale price in the city now $1,119,428, that’s certainly not nothing. But it’s far from a searing indictment that there’s nothing to see here.

Based on what I have observed happening on the upper end of the luxury market, there were some big sales reported during the month of September that would surely add some buoyancy to the average sale price city-wide, particularly with so few transactions to pull the average apart.

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At the same time, we saw inventory start to unlock with 32.2% more listings than last month. For context, this past summer saw very little action. There were many sellers and their agents holding back in anticipation of the fall market, which explains the month-over-month variance.

And in comparison to the almost non-existent inventory the Toronto market has had to contend with for years and years, this feels like a virtual flood, even though we are only sitting somewhere between 18 and 22% above the long-term average. Some might even say that while this may finally be the closest thing to a “buyer’s market” many of us can recall, we are still firmly in balanced market territory.

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As for what conclusions we should be drawing from this, the most basic truth is also the most inescapable right now — 18 months of rising interest rates have absolutely pummelled affordability and eliminated a large swath of buyers from the market place.

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It’s no longer just that buyers are concerned about potential volatility so have decided to sit back and take a beat — no, no; many who may still want or need to make a move simply do not earn enough to qualify in these current conditions so they’ve left the marketplace.

All the while, there are buyers who remain, which explains the fact that prices are generally holding. In fact, on average within the city of Toronto, detached homes currently fetch 100% of their asking price with semi-detached commanding on average 104% of asking price. Townhouses 103% and condos achieving 99% of list respectively.

But even that number hides the reality that many properties are listed and relisted multiple times on their way to an accepted offer. The telling part, however, is that on it’s face we are seeing a gradual drift down in prices (and expectations!) rather than aggressive deals being scored out there.

As the fall progresses we are likely to see more of the same and with it some reluctant acceptance amongst the sellers who have properties they need to move. But provided this stasis holds, any move toward a swift and decisive correction seems a long way off.

@brynnlackie

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