Is Market Activity On The Rise?

Market Statistics | May 13, 2020


I assure you, I’m not trying to paint a rosy picture of the Toronto real estate market with today’s blog post.

In the never-ending war between the Capulets and the Montagues, the voices tend to get a lot louder when one is on their own turf.  Case in point, we’re in a “down market,” which is down from a massive peak, but down nonetheless.  Whether this is a bear market, a buyer’s market, a recession, or a period of continual decline in real estate prices, remains to be seen – and argued.

So when I post any data that might seem positive, optimistic, or present myself as anything less than the proud owner of a Hangman’s noose, the Capulets come out in full force, suggesting that bias or downright “Fake News” might be admidst.

When looking at the real estate market, or any market for that matter, one must always look at the big picture, and evaluate things on a relative basis.  Case in point, if I told you that “my shares of XYX Corp. are down 10%,” would that be a good thing, or a bad thing?

If the shares are down 10%, but the index for that particular sector is down 25%, then this stock is outperforming.  The same is true of the inverse, ie. this is a bank stock that’s down 10%, but every other bank stock is down 2%.

If your shares are down 10%, but that’s after you saw them increase in value by 140% over the previous 18 months, then this is still a good thing, right?

Again, the same is true of the inverse.

If somebody’s house value is up 15%, year-over-year, but the value is still down 50% from when they bought it ten years ago, then can they argue it was a good investment?

All this preamble is to say that market indicators in Toronto are trending upwards, and while they are still down massively since the days pre-COVID, I’m merely trying to explain what’s happening in the market today.

Many people read this blog to know what’s happening on a daily basis, behind the scenes, in the trenches, or according to whatever metaphor you prefer.  There are sellers sitting on the sidelines, waiting to list.  There are buyers who want to know when they should expect inventory, and more to the point, when they should expect other buyers to become active again, thereby increasing competition.

So today, I’ll answer those questions by looking at some data provided to us by our friends at BrokerBay.

BrokerBay has essentially replaced front-desk software like Quick Office, Lone Wolf, et al, and I don’t think I’m out of line when I say most reputable brokerages have now made the switch.  Not all, but most.  And I do believe that eventually, this will become the standard.  As it stands right now, BrokerBay has about a 50% market share, so these numbers are obviously not complete, but they’re more than just a random sample.  I would take these numbers as wholly indicative of the market.

Since BrokerBay is front-desk software, it means they track showings as well as offer registrations, which means they can provide data that no other company can.  There are other websites out there giving us sales and listings data, but BrokerBay has cornered the market here.

So first, let’s look at showings.

Showings are important because they demonstrate buyer activity as well as buyer confidence during a pandemic.

The following graph provides data going back ninety days:

 

 

In case it’s not obvious, Sunday always represents the low-point in showings, hence the major dips every seven days.

As you can see, buyer activity was steadily rising through February, with weekly peaks of 8,000 showings, followed by 10,000 showings, a slight dip down to just over 9,000 the following week, and then eventually it peaked at almost 12,000.

Then along came the “stay at home order,” and showings plummeted.

However, and not to put a ribbon on this, but rather to demonstrate a trend, we can clearly see that showings are, in fact, increasing.  Week-over-week since the end of March, we’re seeing a gradual increase.

Does this mean we’re heading back to a red-hot bull-market?  No, but this leads me to believe, as I wrote in last Friday’s blog, that April did represent a “bottom” of sorts.

There isn’t a direct correlation between showings and price, so I’m not saying that the “bottom’ for showings automatically means that we’ve reached the low-point with respect to the average Toronto home price.  But as per my blog on Friday, I do believe that will ultimately prove to be the case.

Zooming in on the above graphic and looking at showings in the last 30 days, we get a better sense of the trend:

 

 

Again, consider that these “valleys” are simply Sundays.

If you want to look at the peaks as the indicator of each week, then we’re seeing showings more than doubling in the past two weeks.  But we’ll come back to the week-over-week numbers in a moment.

I’m more interested at this point in month-over-month, as I think it eliminates some volatility, and represents a better indicator of a trend.

Let’s look at last week, May 4th to May 10th, up against the week one month prior, which was April 6th to April 12th:

 

 

Take Monday, just as an example.  We’re looking at just over 1,000 showings compared to just under 3,000 showings.  We’re up about 3x, month-over-month.

That week from April 6th to April 12th saw a gradual decline throughout the week, which isn’t typical.  But either way, say the “peak” on Thursday, April 9th of just over 1,500 showings is still almost two-thirds less than the peak of 4,500 showings on Thursday, May 7th.

Cumulatively, the showings are up 149%, according to BrokerBay.

Offer registrations are also up by 158% since the same time period in the month of April, as are listings and sales per the graphic below:

 

 

Now, if we want to look at the time period of May 6th to May 12th and simply compare week-over-week, we see the same trend.

Aside from Mother’s Day, last Sunday, showings are up substantially every single day, compared to the week of April 27th to May 3rd:

 

 

Again, looking at Monday as an example, we’re going from around 2,100 showings to 2,900 inside of a single week.

Had it not been for Mother’s Day, which dramatically reduced the number of showings, these overall stats would be much larger:

 

 

A 26.1% increase in showings, week-over-week, let’s say could have been 35% if not for Mother’s Day, but you get the picture.

Showings are trending up, month-over-month, week-over-week, and with every passing day.

I’ve noticed a major increase in the proverbial “phone ringing” as of late, and maybe it’s just the restlessness with people in self-isolation, or maybe it truly is a sign that people are ready to get back out there and look at real estate.  Either way, I expect our “spring” market to essentially take place this summer, as we continue to ride this momentum through the end of May, and into June.

I’m not here today to make predictions on the Toronto real estate market for the long-term, medium term, or even short term, whether it’s about listings, sales, or price.  I’m merely pointing out that the trend for activity is up, and the statistics prove it.

I’ll make point of a follow-up blog in one month’s time to see where things stand.

If I may bend the readers’ ears a little bit, does anybody want to share their plans if they happen to be an active buyer or seller, or one who is going to wait a short while longer?

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28 Comments

  1. Appraiser

    at 7:18 am

    And so the march right back to where we were has begun in earnest.

    C’est dommage.

    I hate to be the one to say it, but I was just kind of getting accustomed to the pace of the lock-down.

    I have looked semi-retirement in the face and I liked it.

  2. Frances

    at 7:54 am

    Glad to see that the market is showing some positive signs. As someone who owns a 2 bed/2 bath Toronto condo and is considering moving up to a townhouse / small starter-home I am seeing a number of appealing listings at very reasonable prices. Not sure whether we are ready to take the plunge but the opportunity for a pandemic bargain is certainly tempting. The logic being whatever hit we take on the sale-price of our condo would be offset by the savings on the starter-home as well as the current low interest rates. That being said we will likely continue to play it safe and watch how this all pans out.

  3. Chris

    at 8:41 am

    “There isn’t a direct correlation between showings and price, so I’m not saying that the “bottom’ for showings automatically means that we’ve reached the low-point with respect to the average Toronto home price.”

    I think most would agree that April will likely represent the bottom for showings and activity. It was the beginning of the lockdown, during its strictest phase, and people were barely leaving their homes. Now the lockdown is very slowly easing, and people are adjusting to life while social distancing.

    Where a few of us said we’d take the other side of the bet is on pricing. As activity picks up, government subsidies wind down, and we head into a recession of unknown depth and length, it seems overly optimistic to call April as the bottom for prices. But I guess we’ll see!

    1. Bal

      at 10:20 am

      It is interesting….i see cheers in bulls camp now….vs bears camp….. Lol

      1. Chris

        at 10:30 am

        Haha again, small upturn in activity after a huge downturn. As David said, “market indicators in Toronto are trending upwards”, and yet, “they are still down massively since the days pre-COVID”.

        Remains to be seen what happens with price. As you may have guessed, I’m on the less optimistic end of that spectrum!

  4. Ed

    at 9:24 am

    My wife and I had thoughts of moving earlier this year but with what has happened recently in the stock market that thought is now dead. (BTW we are retired, no pensions, so that represents our income).

  5. Kyle

    at 9:51 am

    Interesting point about the Spring market taking place in the Summer. I think the traditional real estate seasonality has been tied closely with the school calendar and many families putting real estate activity on the back burner in the summer. This year the school calendar is totally messed up and we don’t have much visibility into what the rest of this school year, the summer or even next September will hold.

    I could see it going either way. If school does go out for the summer and restrictions lift, i could see families wanting to get away from where they’ve been isolating, which would mean less potential buyers in town, but i could also see a lot of families who would ordinarily travel internationally during the summer staying home, which would mean more potential buyers in town.

    Will be interesting to see how the loosening of restrictions, how the return to school plays out and how the market responds in turn.

  6. condodweller

    at 3:58 pm

    I think it is a fairly safe bet to say that volumes/showings hit a low in April. However this feels a bit like a bait and switch as you don’t mention prices which I assume to mean they are not up. Anyhow, the reason I would agree that activity is off the lows is because after the initial shock everyone was able to take a breath and step back and those who have not been laid off might have gained the confidence to go looking again in hopes of less competition and getting a deal.

    What would be useful to see is a graph of weekly averages compared to weekly average prices, if available.

  7. Clifford

    at 4:17 pm

    My problem is my building does not allow showings, lockboxes, visitors, etc. How to I work around that? Also how does one keep safe in these times? I don’t really want random people coming into my home and infecting my family. How is the market working around that? I’ve heard about people submitting offers with conditional on a walk through? I’d be fine with that, just not sure how many buyers would.

    Was planning on painting and doing some work but I’m going to sell the way it is. Just too much going on.

  8. Shana

    at 6:36 pm

    I purchased in early April. My partner and I are first time homebuyers, we’d searched for a year and been outbid multiple times. We viewed a home just before lockdown measures began. We offered conservatively, setting aside a portion of our downpayment savings for emergency funds. We had found a home that meets our needs, most importantly.
    Whether prices go down or up from here, I’ll have a house I want to live in. And it’s a huge relief to stop searching, to know I won’t have to participate in more bidding wars, and to stop putting our life plans on hold as we now have a budget to plan by.
    I’m relieved that I don’t have to speculate on if prices will go up or down, or when buyers will return, or try to time the market at the risk of getting left behind it.
    Of course, I’m still interested in the market which is why I read this blog 🙂

  9. Johnny Chase

    at 7:29 pm

    30 Parkhurst just sold for $3.5M.

    Are you sure prices are down? They couldn’t get that price 6 months ago.

    1. jeanmarc

      at 7:41 pm

      Only 3 other properties (1 semi and 2 condos) were sold in Leaside in the past 30 days. Unheard of in “regular” spring market in this area for sales.

      32 Thursfield – Sold – $1,420,000
      101-12 Brian Peck Cres – Sold – $715,000
      1010-160 Vanderhoof Ave – Sold – $425,000

    2. jeanmarc

      at 8:39 pm

      30 Parkhurst sold in last week of March which was about a week after the lockdown.

    3. McBloggert

      at 11:02 am

      @JohnnyChase consider that that house has been on the market for 8 or 9 months already! They initially brought it out at $3.7M raised the price to $3.9M and they got $3.5M, still well below their expectations.

      A high quality new build on a 35×130 lot for $3.5M is a solid price – if anything it shows stability – but it isn’t a shocking number. I am not a fan of the house, street or heck, for $3.5M I think they could have bought better in that area – but the only indicator that sale provides me – is a patient seller, in no distress and a flat market for those with good product.

  10. Appraiser

    at 8:08 am

    Anecdata update: new highest freehold month to date sale price for May, 2020 – GTA.

    207 Old Yonge St. North York, sold (in trust), for $8,150,000.

  11. jeanmarc

    at 9:12 am

    Fear is coming back in the stock market as of this morning. Index showing 38

    https://money.cnn.com/data/markets/

    DOW has dropped over 1,000 points in the past week and pre-market showing another over 300 point drop. Maybe that pump (US Fed buying equities) from the bottom in March is now dump time again.

    1. Bal

      at 9:18 am

      Oh, I read that North Americans’ stock market is steady but European is down…..i think I have no life these days other than reading financial news…lol

  12. Appraiser

    at 2:27 pm

    Stress-Test News:

    “…Call out the marching band, BMO’s posted 5-year rate cut today should ease the government’s mortgage “stress test,” effective next week. As it stands, the minimum stress test rate will likely fall from today’s 5.04% to 4.99%. It’ll mark the first time since January 2018 (when OSFI’s stress test began) that this benchmark rate has been under 5%. And, if one more bank matches BMO’s and RBC’s 4.94%, it could drop another 5 basis points.”

    https://www.ratespy.com/stress-test-rate-to-drop-next-week-051413728

    1. Chris

      at 2:35 pm

      Other news Ratespy is reporting:

      – 1-in-5 Mortgagors Have Little Safety Net: “About 20% of all mortgage borrowers do not have enough liquid assets to cover two months of mortgage payments,” the BoC estimates.

      – Debt Ratios to Climb: “The proportion of households with debt-service payments of more than 40% of their income, an indicator of household vulnerability, is likely to rise.”—BoC

      – Arrears to Rise: If the Bank of Canada’s “pessimistic” scenario (its words) plays out, the percentage of people 90+ days behind on their mortgage will peak in Q3 2021 at 0.8%, well above most economist forecasts. The highest arrears rate in CBA records back to 1990 has been 0.65%. The Bank estimates it would have shot up to 2.11% had lenders not agreed to payment deferrals.

      – Timing the Bounce-Back: The timeframe for a housing rebound is “uncertain” and price expectations have softened “quite a lot,” said Deputy BoC Governor Carolyn Wilkins today, but it will “firm over time.” Clearly. The question is whether to characterize the rebound time in months, quarters, years or a decade+. Likely not the latter, say the trusty econo-scientists in the banking and real estate sectors.

  13. Caprice

    at 4:36 pm

    From yesterday’s G&M:

    “John Pasalis, president of Realosophy Realty, also tracks weekly sales and notes that since the low-point of the week ending April 11, with 557 sales in the Toronto region, the numbers have steadily increased since, to 909 in the first week of May. That’s still half of what the sales were in mid-March, but it does represent 63-per-cent growth since the recent lockdown shock. Because active listings continue to decline, the competition for the few houses out there seems to be supporting prices.”

    1. Caprice

      at 4:42 pm

      Also from the same article:

      “Scott Ingram, a CPA and realtor with Century 21 Regal Realty Inc. who collects and analyzes Toronto real estate data, said the hottest-selling price sector in April was the $750,000-$999,000 range for freeholds (that includes semis and townhouses). With 184 sales, it was three times higher than the next price tier between $1-million and $1.25-million that saw 61 transactions.

      “As far as buyers go, it works like a pyramid: at the entry level there’s a whole tonne of people trying to get in, at the $10-million there are very few buyers up there,” Mr. Ingram said. “Even if you take a lot of buyers out of the bottom level of the pyramid, it still leaves a lot of people.”

      1. Bal

        at 4:57 pm

        Maybe entry levels buyers are still gripped with fear of missing out…..

  14. RJ

    at 8:28 pm

    I currently have a condo listed for 3 weeks, and showings are in fact going up.
    My partner is about to put his up for sale as well as we bought a house during a pandemic! Slightly crazy yes. But when you find your home you jump at any opportunity. Recession. Pandemic. Or not. The only thing that will reign supreme is Location, Location, Location!

    1. J G

      at 9:30 pm

      I don’t know, I think This pandemic only made location less important. I know “location location location” is a RE cliche, but the internet was not around for a good part of last century.

    2. J G

      at 9:40 pm

      Imagine a future where WFH is the norm, why would someone who works at a bank or insurance company want to pay $1M for a house in Toronto when he can have the same house in Ottawa for 500k. Big tech like Google is already doing that.

      Sure, some people love Toronto (big city, lots to do, etc.) but would they pay an extra 500k for it when it doesn’t impact their job? Not likely. Tbh, smaller cities are probably better for raising families too.

  15. tony sbrocchi

    at 9:21 am

    My stats for detached home sales in Toronto proper show a 6.7% and 16.7 increase in value over the last 10 weeks for home under Ian’s over 1.2 mill respectively. Inventory is short, buyers are not, bidding wars are everywhere.

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