April is in the books, although it looks like the April showers aren't quite finished. When was the last Mother's Day with nice weather, anyways?
The TREB monthly statistics are also out, and while I try to shy away from regurgitating the TREB Market Watch like every other agent in Toronto who CTRL-C's their way to content creation, I do want to look at the numbers themselves, and see if we can draw any conclusions about where the market was, and where it's heading.
Oh and in case you're wondering, next Sunday – Mother's Day, calls for rain…
Those four paragraphs from the TREB Market Watch must be the most over-shared content in all of real estate.
For some odd reason, I'm on the mailing list for a number of Toronto real estate agents, and it's amazing how every month, I get an email with their name and face, and a copy-and-paste of whatever Jason Mercer and Larry Cerque drew up at TREB.
For what it's worth, I do a monthly e-newsletter in case any of you are interested. It's a recap of the monthly stats, my top blog posts, the top real estate articles, and my thoughts on the month that was, and the month ahead. You can sign up somewhere on the site. Let me look for it………ah, right, it's at the top. Or HERE.
The TREB Market Watch statistics mean a lot to some people, and next to nothing to others.
I tend to think it's like fundamental versus technical analysis in the stock market.
Now right off the bat, I know I hit a nerve with at least a couple of you reading this.
Those of you that work your tails off, analyzing financial statements, and trying to make sense of earnings reports, absolutely cringe at the thought of technical analysis. You think it's a farce, it's lazy, it's corner-cutting, and it's not "real" analysis.
But those of you who do subscribe to technical analysis, probably feel bad for the saps who think that the intrinsic value of a company is reflected in their share price. You don't care why a stock is doing what it's doing; you merely care what it's doing, and going to do.
Either way, fundamentalists and technicians have always been like the Capulets and Montagues, although I'm not sure who is who.
And every month, when TREB numbers come out, there are real estate agents that say, "I really don't care what the numbers say, I'm going with my gut."
For experienced agents, who do high-volume, I really, truly think their "feel" for the market tells a more authentic story than what the TREB numbers say.
A busy agent interacts with a hundred market participants per week. That agent will deal with buyer agents asking questions or providing feedback on their listings, they'll deal with buyers and their sentiments, and then mortgage brokers, home inspectors, other agents in the brokerage and in the industry, all the while, seeing what other people think about the market.
As we moved out of April and into May, there was this "feeling" that something was different about the market.
I gave my thoughts on the April market in a Toronto Star piece last week, which you can read HERE.
Kudos to the author to making it abundantly clear, that as per my suggestion, "There's been a shift in the market, but it's a change, not a downturn."
It's funny because with the average price of a home increasing a whopping 24.5% this past April, over the same month in 2016, there were people who actually suggested the market was "down."
How do you figure?
Somebody told me, "The average home price was up 33.2% in March, and only 24.5% in April. The market is down!"
Well, that's one way of looking at it, I suppose, although I don't think it's correct.
And since the average home price in Toronto was $920,791 in April, compared to $916,567 in March, I think we can put that theory to bed.
In any event, there were two numbers that jumped out at me this past April that I wanted to share with you.
One, was the number of sales.
Two, was the number of active listings.
Here are the percentage increases, from the month in 2017 over the month in 2016, for both sales and active listings:
We came into 2017 with a noticeable pattern: sales are up, listings are down.
Listings, in fact, were down catastrophically.
Imagine seeing 50% fewer active listings from the same period last year?
That's not a dip. That's not a decline. Fifty-percent is a sixteen-wheeler going off a cliff!
And with sales actually going up, it means that there are more buyers, fighting for fewer listings.
The combination was an absolute disaster, and I believe that from January 1st to April 1st, the average price in Toronto was up 20%.
That's 20% in three months, for those of you skimming this.
We see numbers like "25%" used to describe the year-over-year increase in average home price in a given month, and we think that is a significant number.
But inside of three months? 20%?
Just look at the average home price:
Wow, that's a 19.6% increase.
And swear on my soul, it wasn't until this very moment, writing this blog post on Sunday night, that I actually sat down and calculated that January-to-April increase.
See what I mean about the "feeling" some agents get?
The sentiment out there in January was, "There's some crazy sale prices!"
By February, it was, "This sh!t is real. This isn't one or two sales, this is legit, and the market is one fire."
By March, it was, "The market is seriously going up 5% per month."
And by the time we hit April, myself, and a lot of agents out there, were saying, "The market just went up 20% inside three months."
Crazy, yes. But we don't make the market – we just work in it.
So here we are, with April in the rear-view mirror, and suddenly we're looking at numbers that show April, at least compared to Jan/Feb/March, was somewhat "normal" by real estate standards.
Sales were down from April of 2016, which is in part because the Easter long weekend fell in March in 2016, and April this year.
But the massive increase in listings was just shocking.
Even if sales weren't down, and they were in fact up, I still think the amount of active listings would have kept the market somewhat normalized.
Now, if you want a contrarian view, or some sort of argument that the market was just as hot in April, I suppose we could look at the MLS Home Price Index Composite Benchmark:
Using the HPI Benchmark, which some believe is a "smoother, truer" average, we could argue that prices were up more in April than even in March.
But I think it's fair to say, you can make numbers say anything you want.
And then we go back to that good old place, that just simply can't be wrong: your gut.
My sense is that prices will continue to rise.
But how much is the question.
We need one more month of data, and "feel," in order to really get a sense of this market.
The sheer number of listings last month was unexpected to say the least, and if that trend continues through May and June, we may actually see a more balanced market. Not a buyers market, and not a market with a lower average home price than the month before (let alone last year), but home prices will appreciate at a decreasing rate.
Perhaps it bears mentioning here, after my blog post last month comparing Toronto and Vancouver, that the Vancouver HPI Detached Benchmark was up again, which means that the seven months of lower month-to-month prices has now been followed by two successive months of higher month-to-month prices.
Those seven months, of course, followed the introduction of Vancouver's foreign buyer's tax.
So the reaction was felt, but after a half-year, prices are up again.
I think there are a lot of people in Toronto who feel that the Liberals' "Fair Housing Plan" might have an effect on the market here in Toronto, and they're not wrong.
I think the combination of Easter/Passover in April, plus the Fair Housing Plan, plus the Home Trust story, plus the miserable and rainy weather, made for a really strange month in the real estate market.
That Liberal announcement did get the attention of a lot buyers and sellers, and while most people agree that the actual FHP itself won't affect the market, the announcement itself might have put a few buyers on the sidelines, and lit a fire under a few sellers.
We'll see if the market goes back to its old ways in May.
I'll make a point of looking at the same numbers in an early-May blog post, and comparing to what we've discussed here today.
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