Well, what is our option set? Is it price? Sales? Listings – active or new?
Are we looking month-over-month, or year-over year?
I suppose you could also ask, “Do you want to paint a positive picture, or a negative one?” After all, we can make numbers say anything we want.
Let’s look at the November TREB numbers, and if you’ve done so already, you’ve probably already noticed one massive outlier…
I’m always interested to see which statistic the various news outlets lead with.
Excuse my repetitiveness, but you can make numbers say anything you want.
And as I alluded to above, you can choose to focus on price, sales, inventory, or any number of statistics found within each month’s TREB Market Watch.
And you could put a negative, or positive spin on just about anything.
In fact, let me try that. Let me show you what the newspapers were writing about, and I’ll add a smile.
On Tuesday, when the TREB numbers were released, the Financial Post chose to look at price:
“Toronto home prices are down 8.8% since May,” the headline reads.
A postitive addendum here could read, “….but Toronto condo prices only down 1.7%.”
Over at the Toronto Star, they chose to look at sales:
Sales were, in fact, up in November, over October, but still down 13.3% in November 2017, over November 2016.
A positive addendum here could read, “….but the 13.3% drop pales in comparison to the 26.7% drop in October, and the 35.1% drop in September.”
It’s a reach, but not a long one.
The 13.3%, year-over-year drop in sales isn’t significant, in the context of September and October.
So while these two newspapers chose to look at price and sales, which are usually the #1 and #2 statistics people choose to use, bull or bear, it was a completely different statistic that caught my eye.
Wait. “Caught my eye” is an understatement.
If we’re going to stay on the theme of eyes, let me use a photo to accurately convey my reaction:
It was exactly like that.
Folks, let me show you a screenshot of TREB Market Watch, and you tell me, what makes your eyes pop out:
Any ideas, folks?
I saw it right away!
And while I can read the TREB Market Watch like braille after 15 years, I still think even if you’re seeing this for the first time, there has got to be one figure that jumps out at you.
Look again one more time before I highlight it for you.
Check this out:
That is just mind-boggling.
Eye-popping, you might say!
110.6% of anything, in just about any context, is just crazy.
But a 110.6% increase in active listings, year over year? I just can’t believe what I’m seeing.
To put this in proper context, consider that in the months preceding, the active listing numbers were still high:
But over 100%?
As in double?
It’s downright nuts. And we’re all scrambling to make sense of it.
So I spent Tuesday night looking at past active listing data, to do exactly that; make sense of it.
First, consider the definitions that TREB uses:
“New Listings” are listings entered into the TREB MLS system between the first and last day of the month/period being reported.
“Active Listings” are listings at the end of the last of the month/period being reported.
So first, I simply went back five years (save for December, for the purpose of this exercise), to look at the number of active listings in each and every month.
Here’s how the data looks:
Now just as the “110.6%” figure jumped out at me above, upon glancing at the finished list here, I had three things jump out at me:
1) There are only six months in the past five years with less than 10,000 active listings, and three of those were consecutive, to start out 2017: January, February, and March. Jan/Feb/March of The inventory levels were historically low to epic proportions.
2) The “22’s” on the right side of the chart are jumping out at me. There are also some “20’s” in the same line – 2013. The amount of active listings in 2013 is shocking.
3) I’m not sure what seems to draw the eye in more: the drop in active listings to start 2017, or the surge in active listings to end 2017.
Whether you can do long division in your head or not, just look at the November numbers!
From 8,639 active listings in 2016 to 18,197 in 2017!
That’s what “110.6%” looks like!
But as my eyes danced back-and-forth, from the left side of the chart to the right, I continued to bounce over those 2016 numbers, and it became quite apparent that if anything, 2016 seemed to be an outlier.
The number of active listings in 2016 were the lowest, by far, of any year.
And active listings have been dropping every year for the past five years, save for the latter half of 2017.
Take a look:
What I’m seeing here, once you get past the black numbers ranging from 43% to 111%, is a massive drop in listings in 2016 as the year went on.
This is what I remember from 2016! Listings were plummeting each and every month, and this continued into early 2017, when you see the insane fifty-percent drops in active listings.
So with the active listings dropping so drastically in 2016, perhaps it seems to reason that they would increase dramatically in 2017?
If I’m right, and 2016 was, in fact, an outlier, then the 2017 monthly “active listings” statistics wouldn’t look as bad when compared to 2015, 2014, and 2013.
Let’s look at that:
The 2017 numbers over 2015, 2014, and 2013 show that active listing levels were actually in line.
Take January, February, and March out of the equation for a moment, since we know those 2017 inventory levels were historically low.
Compared to 2013, active listings were still lower in 2017, in the remaining 6 of 8 months.
That’s 5 of 8 months compared to 2014.
And 2 of 8 months compared to 2015.
While I think that 2016 is an outlier, I’m also starting to think perhaps November is as well.
In fact, the one stat I didn’t show above, and could have included in the first chart was the sum total of yearly active listings, not including December.
This should put 2016 in context:
Active listings, through November, are up 31% in 2017 from 2016.
But that’s after dropping 29% from 2015.
So maybe the conclusion here, is that the massive decline in active listings in 2016 is the real reason for the eye-popping monthly, year-over-year increases in active listings that we’ve seen this fall? That, and perhaps November’s staggering 110.6% figure will seem like an outlier down the line once we have more data?
Or do you think I’m painting a rosy picture, just for the sake of doing so?
That’s fair. I can see how this looks.
But folks, I’m just trying to make sense of that “110.6%” statistic, because it’s so shockingly out-of-place. And as you can tell from the last chart above, we’ve seen active listings decline year after year, and even with that whopping 110.6% stat, active listings up to the end of November still trail 2015, 2014, and 2013.
So what else did we see in the November TREB numbers?
I certainly don’t want to gloss over the rest, but the active listings data was my take-away.
The average home price declined, month-over-month, by 2.4%.
It stops the “trend” of house price increases, after gains were made, month-over-month, in both September and October.
Sales were down 13.3%, year-over-year, but up marginally over October, and more significantly over September.
But perhaps this is the one month where price and sales seem somewhat boring, compared to the listings data.
And now we’re into December, which is a historically slow month, and I’d expect to see that “average home price” dip about 3-5% in December, over November, as is often the custom.
So what then? Start the discussion about January?
How it’s going to be slow, at first, as buyers take the wait-and-see approach to the new lending regulations, only to discover the regulations are having little, if any, effect, at which point buyers pounce, and the market heads back up?
Or how the Armageddon is coming, bears have been right for ten years, and the market is going to plummet?
Hmm…maybe I’m the only one who finds the active listings data positively fascinating…