Are there different levels of “wrong?”
Like, if somebody said to you, “Oh, wow, that’s really wrong,” does it make sense?
If you thought that the Seattle Seahawks were going to beat the Baltimore Ravens on Sunday, and instead of winning, the Seahawks not only lost the game, but lost by a score of 37-3, does it make you “more” wrong?
Or is wrong simply wrong?
In this space last month, I mentioned that was 110% certain that the GTA average home price would show a decline in September, over August. And while it doesn’t take Carl Friedrich Gauss to tell you that you can’t be more than 100% certain of anything, I was, in the end, wrong.
So does it make me more wrong when I was certain that we would see a decline in GTA average home price from September to October, only to find out last week that prices actually increased?
Gamblers would call that a “parlay.”
A “double down,” if you will.
But based on my feeling in the market, both in September and October, I remain completely and utterly confused as to how the GTA average home price hasn’t declined – on paper.
Because I’ll tell you this, with absolute certainty: there isn’t a single property in the city that was “worth” more in October than September.
Ask any seller out there on the market right now, or who ended up selling last month, and they’ll tell you that the market conditions have tightened since September.
Having said that, the stats say what they say.
The average home price in the GTA went from $1,119,428 in September to $1,125,928 in October.
That’s an increase of 0.6%.
Now, you might be thinking, “Come on, David, that’s a rounding error! Who cares about 0.6%! What’s all the fuss about?”
But had the TRREB average home price come in at $1,085,000, which is good for a 3.1% decline from September, I wouldn’t have batted an eye.
In fact, if the TRREB average home price came in lower than the August price, I wouldn’t have been surprised.
The stats don’t lie. They aren’t wrong.
And many Realtors are happy that the media headlines are talking about “prices increasing.”
But in my opinion, the headlines and the stats aren’t showing the true market conditions out there, which I feel right now are poor.
Here’s an update on the GTA average home price, which we have going back to 2021 so I think we’ll have to pare this down next month…
Here’s the problem with the data above: nobody’s house is worth more today than it was in March, but the stats aren’t backing it up! It clearly shows a March price of $1,108,606 compared to an October price of $1,125,928, and you don’t have to be Pythagoras to note which price is higher.
But if a would-be home or condo seller saw this, they would not accept the market conditions out there today.
Give me ten minutes and I’ll pull a condominium unit that sold for 5-10% less in October than the identical unit sold for in March.
Give me twenty minutes and I’ll find a whole bunch of them.
I have a very, very good feel for the market, and what these stats are showing does not work out in practice.
As far as the individual TRREB districts, we saw positive movement in three of the “Big Five” and negative movement in two:
Every average is made up of other averages, right?
So while the TRREB average increased by 0.6%, we saw York and Halton decline, while Peel, Durham, and the 416-Toronto all increased.
We’ve seen a lot of ebbs and flows through these five major TRREB districts this year, but overall, all five remain in the black on a year-to-date basis.
While January is a very slow and often seasonally depressed month, it’s worth looking at the year-to-date data for each area:
As I said, January is typically a seasonally depressed month, but these appreciation rates would meet my “sniff test” or “gut check” for how the market has moved this year. Perhaps I would suggest that Durham’s rate of appreciation is higher than expected, but overall, this feels about right.
In any event, while prices have slightly improved, we’re still seeing all-time-low sales.
Remember that in this space last month, we saw only 4,642 sales in September, which was the fewest sales in any month of September since this data began 2002.
Now, what of October?
Essentially the same theme.
4,646 total sales, which is four more than September, but also the fewest all time in this month…
Interesting that the second-lowest in any month of October happened to be 2022. So it’s not like this fall’s slowdown should be unexpected, and yet here we are, collectively looking skyward for answers.
We say that the “fall market” starts after Labour Day and begins to fade once we turn the page to December, so we’re essentially looking at three months, often less.
So what relationship should we expect between September sales and October sales?
While September is historically a “big month” as we see a pop from a solemn summer, history shows that we should expect to see October sales come in higher than September.
In fact, from 2002 through 2022, we saw sales increase 15 times, compared to only 6 years of decreases:
From 2002 through 2022, the average movement from September to October was +4.9%.
And yet this year, we saw an increase of 0.1%, or those measly four sales that I noted above.
I shudder to think what November will show.
Last month, I also showed you a statistic that I simply couldn’t comprehend:
September’s sales-to-new-listings ratio was 28.6%.
Anything under 50%, in theory, points to a buyer’s market, and anything over 50% points to a seller’s market.
I couldn’t remember the last time I saw something under 40%, let alone 28.6%!
In October, this ratio ticked up – barely!
How’s 32.3% sound?
Better than 28.6%, but still not anywhere near anything resembling “normal.”
In fact, just last October, sitting at an SNLR of 47.7%, we were talking about how shocked we were to see the figure under 50%.
So how’s 32.3% sound?
Like September, the October SNLR is the lowest in any October, ever:
That’s bleak, man. Better than September, but still from the world of “Oh my god, I cannot believe this.”
An uptick in SNLR, it seems, is expected from September to October. It’s happened in the last two years, which I’ll show on a chart in a moment.
SNLR typically declines in “peak” spring season like April, May, and June, then spikes in the summer when listings are down, declines again in the fall, and spikes in December when absolutely nobody lists.
This year, the SNLR tells a very interesting story.
It shot up in the first couple of months and has steadily declined every since. Despite a small uptick from July to August and September to October, it’s part of a downtrend that began in April, and which forms an opposite shape to that of 2021 and 2022:
Are we guaranteed to see that same spike in December?
It’s been automatic in previous years, but this fall seems like no other.
As for this month, I think listings will be down substantially and there will be sales, so the SNLR will increase. What sales? Which sales? Think of all those properties sitting on the market, for which buyers are biding their time, waiting to make an offer. I think this is the month when existing inventory clears, and with new listings down, we’re going to see SNLR back around 45% for November. Remind me to bookmark that prediction.
Lastly, I want to look at SNLR in the five major TRREB districts:
First, I find it interesting that the 416-Toronto segment saw the lowest SNLR from January through May, and yet the appreciation through 2023 is the highest of the five, by far.
The other eye-catcher here is that Durham Region is the only district of the five that did not see SNLR increase from September to October, but that seemingly had no effect, since the average price increased by 2.7%, month-over-month. Durham’s SNLR has been highest for three months running.
Overall, the five districts seem to be moving in tandem, but there’s more differentiation this fall than there was in the spring.
There’s been a lot of talk in the comments section lately about houses that aren’t selling, or houses that are being listed over and over with different “strategies.”
On Wednesday, I want to look at some of these strategies, with or without quotations.
We’ll decide which are actual, bona-fide strategies, and which are absolute shots in the dark.