Tuesday, May 23, 2017

Listing & Re-Listing: Is THIS The Reason For The Surge In Inventory?


Last Friday, I brought up the topic of "listing and re-listing," which seems to be real estate's new plague.

I certainly don't fault sellers for re-listing their properties at higher prices, when their "strategy" of under-listing, and holding back offers, doesn't work.

But as May turns to June, and beyond, we might start to see more sellers simply (gasp!) list at fair market value to begin with.

Today, let's take a sample area of the city, and see just how many properties have been re-listed…


If you're following the real estate market closely, and have been for the past few years, it's very likely that you really only care about, or follow, the increase in price.

The increase in the average price of a Toronto home over the last half-decade has been staggering.

With an average sale price of $497,130 in the year 2012, to an average home price of $920,791 this past April, we've seen house prices almost double in five years.

But the story doesn't end there.

In fact, you might call that the conclusion to the real story, if you're following along closely.

Whether I'm writing my monthly e-newsletter and making note of stats, or penning dedicated blogs on the subject as I did in the summer of 2016, I'm always more interested in the reason for the price increase, rather than the price increase itself, and over the last few years that has come down to simple supply and demand.

Ah yes, supply and demand!  Our old friend!

Low supply, high demand, and massive price increases.

What a fantastic relationship the three have.

Just a perfect little economic love triangle.

Last summer, I really started to buckle down and look at the massive decline in real estate inventory, as a cause of the even larger increase in prices.

So much of the uninformed, or uninterested general public want someone, or something, to blame, and hence we started to get stories about foreign buyers, domestic house-hoarders, and people clamoured for government intervention.

But as we noted here on TRB, the decline in listings, combined with the surge in sales, had to be the #1 culprit, foreign-buyers be damned.

The decline in "active listings" was hovering somewhere between -30% and -35% all summer long and into the fall market, and it spiked massively in December when active listings were down 48.1%.

Then the unthinkable came: we saw -49.5% in January, -50.5% in February, and -35.2% in March.

The early spring market (or winter for those who are more sensible than us Realtors…) saw a dearth of listings, and demand seemed to be at an all-time high.

Prices soared, and it wasn't until April that we started to see things slow.

As I said last week, I don't think prices have slowed, but the pace of sales have.

The "game" has changed, and the players are learning to adapt, as we discussed in Friday's blog.

So when the April TREB numbers came out three weeks ago, we saw that "active listings" number go from -35.2% in March, to +3.0% in April.

And everybody breathed a sigh of relief.

"Here comes the 2017 housing market," people mused.

And yet the feeling out there, among buyers and buyer agents, is that the inventory levels haven't really changed all that much.

The re-listing of properties is out of control, and I personally believe that it's a major reason why we saw that supposed +3.0% increase in "active listings" in April.

So I spent the weekend examining a few areas of the city, and looking up each and every listing to see if this listing is truly "new" or if it's a retread.

What I've done below is taken E01 and E02, and tracked every active listing.

I've taken the addresses out, but left the price, and added a column for whether the property had been re-listed, and whether it had been increased (or decreased in one case) in price.

Here's how E01 looks:


That's 64 total active listings in E01.

And 31 of them have been previously listed.

That's a whopping 48% of all active listings in E01 that have been re-listed.

But once you factor in the 7 properties that were not previously listed, but were increased in price, that's 38 out of 64 listings that have essentially "tried the market" at a lower price before going with "Plan B."

That's an even more shocking 59% of all listings in E02 that are on to "round two" of the pricing game!

Let's look at E02, just to see if E01 was an outlier:

That's 61 total active listings in E01.

28 of them have been previously listed.

46% of all active listings in E02 have been re-listed.

And again factoring in the 4 properties that were not previously listed, but were increased in price, that's 32 of 61 listings that have gone to "Plan-B," or 59%.

Exactly the same number as with E02, so we're not dealing with an outlier area.

And while I'm sure some areas are different then others, I think it's fair to say that this is a pattern.

The most interesting take-away from these two data sets is that the clusters of "yes's" are around the $1M mark.

In E01, there are 17 properties listed between $989,000 and $1,100,000, and 14 of them have been re-listed.

In E02, there are 9 properties listed between $989,000 and $1,150,000, and 6 of them have been re-listed.

This seems, both anecdotally through my own experiences and blog posts, and statistically, to be the area where most properties are being re-listed.

Those $799,900 listings, where sellers are looking for $1,000,000, are consistently being re-listed.

14 of 17 in E01 is an incredible statistic!  There's simply no way to misinterpret what's going on in this price point.

So let's now cycle back to my original point about the "surge in inventory," and where that magical +3.0% increase in active listings came from in April.

If we're seeing close to 50% of all properties listed for sale in E02 and E02 re-listed, then perhaps this might explain why the surge in active listings?

The question you're probably asking is, "We know that properties have been re-listed before, so how do the 46% and 48% re-list figures compare to May 22nd of 2016?"

Great question.

And unfortunately, there's no way for me to track that.

There's no way to go back into MLS and see what was listed for sale on that particular date.

And any work-around, estimate, or attempt at repeating the date would be questionable, so I figured, why bother?

In any event, we're two weeks away from TREB's release of the May data, and that will be very interesting to say the least.

On Thursday, I want to look at four or five reasons for the "strange" month of April in real estate, but in the meantime, I welcome you to draw your own conclusions from the data above…

The post Listing & Re-Listing: Is THIS The Reason For The Surge In Inventory? appeared first on Toronto Real Estate Property Sales & Investments | Toronto Realty Blog by David Fleming.

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