“It feels like 2017 out there.”
I must have said that a hundred times in January.
And trust me when I say that I was hearing this said to me, just as often as I was the one saying it.
At the risk of repeating myself from the last few Pick5 videos, and my eNewsletter from last week, this past month of January had tight market conditions that were only rivaled by January of 2017, when all hell broke loose.
Every agent that I spoke to, whether on the buy-side or the sell-side, felt the same way.
Inventory was tight, offers were through the roof, and so too were prices.
You might have read my blog from two weeks ago, titled: “The 1-Bedroom Condo Market Is On Fire!”
Things have only gotten worse, or better, depending on your viewpoint, since then.
The condo market started 2020 with a roar, and the housing market was slow to develop. But this wasn’t for lack of interest, but rather lack of listings. Since I wrote about the 1-bedroom condo market, the freehold market has absolutely exploded.
Step into a house that you feel “should” be worth $950,000, and prepare yourself to bid $1,000,000.
How do you feel when it sells for almost $1.1 Million?
That is how 2017 felt, and it started right away; right out of the gates.
As we know, the pressure built, and prices rose through April, until the Liberal government stood in front of a podium and told the public they were going to cool the market. Come May, inventory skyrocketed, demand dropped, and prices came back down.
I believe, anecdotally, that prices in some market segments rose 25% from January 1st of 2017 to end-April. Prices dropped, but have since recovered, and been surpassed in just about every market segment in the 416.
So does 2020 resemble 2017?
And if so, what can we expect to happen from February onward?
Let me answer the second question first, since it’s probably easier, although some of you might not agree with my answer. I believe that short of the government making a similar announcement as they did in 2017, this market will continue it’s trend. I don’t believe that, if we have four months of rapid appreciation, that we’ll see that appreciation continue thereafter. Not to the same extent, at least. But I don’t believe we’re going to see true “relief” in the market in spring or summer.
As for the question of how January looks in the rear-view mirror, and whether it resembled 2017 in practice as well as in the data, I have to really look at the numbers to draw that conclusion.
Before I get to the numbers (and I have yet to make a conclusion on this – I’m basically blogging and deciding in real-time), I will say this: January of 2020 was the tightest, and at times, the toughest, market I have worked in, outside of Jan/Feb/Mar/Apr of 2017. It just “felt” like 2017.
But do the numbers support that?
There have been times before when the numbers didn’t align with my “feel,” let’s not forget.
So first, let’s look at prices.
The average sale price in Toronto (GTA) in January was $839,363. This actually surpassed December. So my first question would be, “How often does the January price surpass that of December?”
Here’s the answer:
It seems that the average sale price has increased from December to January in 5 of the previous 7 years.
So this is much ado about nothing.
As for the 416?
Even though 0.1% is a rounding error, it’s still an outlier – even at 0%.
So is it possible that we’re experiencing 2017-like conditions in January, when the 416 average home price barely moved from December, which it always does?
The condo market told a different story:
This makes sense.
The average condo price rose 3.5%, month-over-month, from December. This is an average, of course. But it backs up how the condo market felt out there.
It’s interesting that in 2017, the average condo price was only up 1.0% in the same period. But in 2017, it was freehold that led out of the gates to start the year. Condos actually followed.
Sales were up 4.1%, month-over-month, which is somewhat in line with last year, but not at all in line with the previous years:
The month-over-month data can only take us so far, which is why, when we’re finished this, we’ll look at year-over-year.
Trying to determine whether it’s common or uncommon to see more sales in January than in December is difficult.
This has been the case in the past two years, but before that, we saw December trump January in four straight years. To be fair, we know that sales in January of 2018 dropped off significantly because of the up-and-down year of 2017, but that figure would still be red regardless.
From the sales data, the only conclusion that I’ve drawn is that I can draw no conclusion.
Looking at new listings, we see that 2020 is in line with 2019 perfectly:
Listings should rise in January, over December.
When it comes to active listings, again, I would maintain that this data is not really telling us much:
The month-over-month data sort of fizzles out as we get into listings, and so far, the only thing the data tells us is that the condo market rose significantly to start 2020, but all the other data is somewhat in line with expectations.
So what did the January 2020 data show us, year-over-year?
Price (GTA): +12.3%
Price (416): +13.7%
New Listings: -17.1%
Active Listings -35.0%
Perhaps we could have started with this data, but I didn’t want to paint this picture right after talking about how hot the market is. First, I wanted to compare December to January, and look at how previous years can tell us whether the market is in line or not.
Now, looking at January of 2020 compared to January of 2019, we can see where our current market is.
Prices are up double-digits in the GTA, and when we hone in on the 416, it’s even higher.
Sales are up 15.4% year-over-year, and that’s amazing considering inventory is down.
It doesn’t take a rocket scientist to determine that if sales are up, and inventory is down, then prices will rise as well.
With simply more demand, and the same amount of supply, prices would rise.
But with more demand and less supply, well, a 12.3% increase in the average home price is no surprise.
So let’s look at the year-over-year data for all the months of January in recent memory, just as refresher:
Now this, I find quite interesting.
I remember all of these periods and why certain stats stand out.
For example, the RED average home price in January of 2018 was merely because of how hot 2017 was.
Same goes for that +138.1% blight on the active listings column in 2018, and the -22.0% figure for sales in 2018.
These were all a by-product of the crazy 2017 spring market.
So what then can we conclude about how January of 2020 compares with January of 2017?
Well, I will present you with this:
While the month-over-month data didn’t make the market seem like it was all that hot, this comparison of January of 2020 and January of 2017 sure does!
The figures line up almost perfectly.
The average home price in January of 2017, in the GTA, saw a far higher increase over the previous year, just as the active listings saw a much more dramatic drop. But save for those two figures, aren’t these numbers telling you that this past January did, in fact, feel like 2017?
This data, I do believe, is undeniable.
And if the first week of February is any indication, this is going to continue.
Last week, I lost two bids on houses that both had twenty offers or more.
I asked a colleague how many offers he had on his cookie-cutter, 1-bedroom condo listing and he said, “Only ten.”
If that two-word sentence doesn’t sum up 2020 so far, I don’t know what does…Back To Top Back To Comments