For those that don’t know Lord Peter Baelish, then perhaps the title of today’s blog post makes little sense. Pun fully intended.
Somebody told me to watch this show called “Game of Thrones” back in 2012, and I tried. I did. But it was awful. Almost unwatchable.
I tried again about a year later, but once again, I found myself not able to finish the first episode.
Later that year, I tried a third time, and guess what?
I was hooked.
I binge-watched the entire first season one lonely Friday evening while my wife was working an overnight shift, and then I ran out and bought the box set for Season 2 the next day.
Like many Game of Thrones fans, I absolutely hated Lord Peter Baelish. But then again, I actually quite liked him to.
At the very least, you have to respect his constant scheming, do you not?
Well, at least he gave us some memorable quotes…
On Wednesday afternoon, I sat in my office yelling, “Oh My God! Oh My God! over and over and over. This could have been for a seemingly-infinite number of reasons, but after a dozen people asked, “What is it? What’s the problem?” I revealed that the February TREB stats were out, and they were downright ridiculous.
I had made two not-so-formal predictions about the February stats:
1) Average home price would increase by a larger-than-normal amount
2) Average 416 condo price would be up 4-5% in only a single month
But when I laid my eyes on the stats, I was absolutely shocked.
Where do we begin?
The average home price in Toronto (GTA) in February was a whopping $910,290.
For those without any basis of comparison here, let me just say – this is a lot!
This is up 8.5% since January, when the average price checked in at $839,363.
And more to the point, this is the first time we’ve seen a price over $900,000 since the infamous month of April, 2017, when the average home price was at $920,791.
Perhaps we should start there?
We all know about the “peak” in April of 2017, which serves as such because after the government stepped in front of a podium in late-April, the real estate market fell off dramatically. Coming off that $920,791 peak in April, the average home price dropped below $800,000 in June, and it remained there for a full year, until April of 2018, when the price moved back across that $800K threshold and landed at $804,584.
Here’s what’s even more interesting: the average home price remained stagnant thereafter for a full year, never going higher than $808,000.
Since April of 2019, when the average home price hit $820,148, we’ve seen a steady increase, with a peak of $852,142 in October.
Then February happened.
And suddenly we find ourselves at a whopping $910,290.
I still can’t quite wrap my head around it.
From $839,363 in January to $910,290 in February – an 8.5% increase, is incredible.
Just how incredible?
I decided to look back at the top twenty month-over-month increases since January of 2012, and this is what I found:
The 8.5%, month-over-month increase that we just experienced from January to February represents the third-largest increase in a period of ninety-seven months, dating back to 2012.
But as you’ll clearly see, the top five months are ALL the month of February.
What does this tell us?
Well, I suppose it undermines that “huge” 8.5%, month-over-month statistic that I was just touting.
It looks as though February is, historically, a huge month for big month-over-month gains, since all nine years from 2012 to 2020 are present in the “Top 20” list above.
Perhaps this is because January is slow, or perhaps it’s because February is busy. Either way, I think it takes just a little bit of the lustre off our “huge” month.
I would be remiss if I didn’t also mention that of the 97 months examined, 41 months saw a decrease in month-over-month price, and 56 months saw an increase. So let’s not forget, prices go up in the long-run, but the market is cyclical. About 40% of months do see a decline from the previous month, and I would assume the usual suspects are July, August, November, and December.
Now the second big stat from February is that, year-over-year, we saw a 16.7% increase in the average home price, from $779,791 in February of 2019 to $910,290 this past month.
Let me run the same stats as I did above, this time for year-over-year, and we’ll look at the top-20:
This time around, the month of February, 2020 is “only” 11th on the list, but what do you notice about the months above?
Included in this list are: June, August, September, October, November, December, January, February, March, April – every single month, save for August, from June of 2016 to April of 2017. That is exactly when the market began its ascent.
The rest of the months below February of 2020 fill in the other blanks, ie. the “missing” month of July 2016, the preceding months of 2016 (Jan,Feb,Mar,Apr,May), the “after peak” month of May, 2017, and then one random, misplaced month of June, 2015.
Oh – and of course, January of 2020.
What does this tell you?
Well, if you’re asking me, I think this says we’re in the middle of a massive surge in prices, and I say this even after the incredible month we just had.
Anecdotally, the start to 2020 feels far busier and far more chaotic than the start to 2020.
On paper, it looks as though we’re trailing 2017, but still following the same pattern.
The condo market was honestly where I saw the most insanity, with 20+ offers on every unit for sale, whether it was a hot loft on Sorauren Avenue or a crappy 1-bedroom on Dan Leckie Way.
While I thought the average Toronto home price was set to increase substantially month-over-month in February, I thought the 416 condo price would probably double whatever appreciation we saw in the average Toronto home price.
Yes, the condo market was that hot in February.
In fact, I believe that it is the condo market that drove price gains in January and February, unlike 2017, when the freehold market was the driver and the condo market was just along for the ride.
So I ran the same stats for the 416 average condo price as above:
This time around, the 6.4%, month-over-month gain is “only” the seventh-highest monthly gain since January of 2012, and again, we see a pattern in the top figures, notably that the top-seven consist of February, March, and September. No matter how big these numbers are, as with the first chart that I displayed above, there are most definitely certain months of the year where we’re accustomed to seeing larger month-over-month increases, and therefore these must be taken at less than face value.
Note that February of 2017 is leading the way, with March of 2017 also in the top-five. The market in spring of 2017 was that hot! Even though freehold led the way, the condo market was appreciating rapidly as well.
So what do we make of this 6.4% figure in February?
The month of February seems to be the historical leader in month-over-month appreciation, but I suspect that this is going to continue into March. Even if we “only” saw a 3% appreciation this month, that would mean the average condo prices would increase to $744,355, and that’s just a downright crazy number.
This is one of those cases where the “feel” of the market out there (specifically how many offer nights of 20+ offers took place on downtown condos) doesn’t quite match what the numbers show. Then again, if the average 416 home price had only increased by 4%, then we’d be looking at this 6.4% appreciation in condos like it was the Holy Grail, so I guess it’s all relative…
As for sales, they were through the roof.
Up 58,4% over January (4,581 to 7,256), but when we look at the historical stats for the month of February, once again, the trend continues:
Does this feel like deja-vu yet?
At the top of the list, to nobody’s surprise, is 2017 at over 8,000 sales. Then the maid-of-honour, 2016, makes an appearance.
Tangential to this conversation – look at 2019, wow. I did not expect to see it at the bottom of the list. I certainly don’t remember last February being slow, but I digress.
So in a conversation about hyper-appreciation, with demand (sales) going up, can we assume that supply (listings) was low?
Yes, we can.
Have a look:
Oh, yup, there’s 2017 again, at the top of the list!
And this time, February of 2020 appears second, well ahead of 2016.
With an average of 12,121 active listings in the nine months of February from 2012 to 2020, we can simply not under-state how low 8,816 listings this past month truly is.
So for those playing along at home…
Active listings were the second-fewest in nine February’s.
Sales were the third-highest in nine February’s.
Is it any wonder why the average 416 home price is up 8.5% month-over-month, and 16.7% year-over-year?
Last but not least, I want to talk about the “gap” between detached and semi-detached homes.
You would think that as prices rise, the gap would widen. But in fact, it’s the opposite.
In January of 2017, the average detached home price in the 416 was $1,336,640 and the average semi-detached price was $902,688. That meant if you purchased a semi-detached home for $902,688, you would have to pay 48.1% more to obtain a detached home.
This figure peaked at 50.1% in July of 2017 when the average detached was at $1,304,288 and the average semi-detached was at $869,227.
Here’s a look at the two averages plotted together:
Don’t worry if you’re eyesight isn’t what it used to be, I’ll save you the trouble: the gap in February of 2020 was a mere 22.9%.
The average detached home price in February of 2020 was $1,485,304, still 5.9% below the peak of $1,578,542 reached in April of 2017.
The average semi-detached home price in February of 2020 was $1,208,073, which is 9.4% above the previous peak of $1,104,047 reached in April of 2017.
The gap between average detached and average semi-detached home prices continues to shrink as the entry-level and/or first-time buyers put pressure on that segment of the market.
February of 2020 will go down as one of the most chaotic months I’ve seen in my career.
Do we expect March to be any different?
Arguments could be made either way. Convincing ones too.
But if I were to place a friendly wager with a colleague or a client, I’d bet whatever’s in my wallet that we’ll see further price appreciation in all market segments in March. Even semi-detached, which is just hard to fathom…Back To Top Back To Comments