Early signs of a slowdown on-the-ground now strongly showing in the latest market numbers.
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Three months ago, in my March 2022 report, I discussed the first early signs of a slowdown I was seeing in the housing market. At the time, all of the monthly statistics were still showing a housing market on fire — but the on-the-ground trends were telling a different story.
Three months later, Toronto’s housing market had the lowest sales volume in twenty years for the month of May (aside from 2020 during the first months of the COVID-19 lockdown).
House sales in May are down 40% over last year and down slightly when compared to last month, a period when sales are usually trending up.
The average price for a house in May was $1,444,169 down from $1,679,429 in February, but up 17% over last year; the median house price in May was $1,251,000, down from $1,485,000 in February, but up 10% over last year.
New house listings in May were flat compared to last year, but well below previous years while the number of houses available for sale at the end of the month, or active listings, at the end of May was up 23% over last year.
Condo sales were down 35% in May over last year and below pre-Covid sales volumes for the month.
The average price for a condo in May fell to $795,409, down from $840,444 in March. The average price is up 13% over last year. The median price for a condo in May was $720,000, up 13% over last year, but down from $777,000 over last month.
New condo listings were up 3% over last year, and ahead of typical new listing volume for the month. The number of active listings for condos was up 21% over last year.
House sales (low-rise detached, semi-detached, townhouse, etc.) in the Greater Toronto Area (GTA) in May 2022 were down 40% over the same month last year and well below historic levels for the month of May. It’s also worth noting that sales also declined on a month-over-month basis when compared to April. Normally, we expect sales to trend up from April to May so the sales trends in 2020 and 2021 below are not typical for the housing market.
New house listings in May were flat when compared to last year, but well below historic new listing volumes for the month of May.
The number of houses available for sale (“active listings”) was up 23% when compared to the same month last year, but still 35% below pre-Covid levels in 2019.
The Months of Inventory ratio (MOI) looks at the number of homes available for sale in a given month divided by the number of homes that sold in that month. It answers the following question: If no more homes came on the market for sale, how long would it take for all the existing homes on the market to sell given the current level of demand?
The higher the MOI, the cooler the market is. A balanced market (a market where prices are neither rising nor falling) is one where MOI is between four to six months. The lower the MOI, the more rapidly we would expect prices to rise.
While the current level of MOI gives us clues into how competitive the market is on-the-ground today, the direction it is moving in also gives us some clues into where the market may be heading.
While below a very competitive 1 MOI just two months ago, house inventory in the Toronto area increased to 2 MOI in May.
The share of houses selling for more than the owner’s asking price declined to 56% in May.
The average price for a house declined month-over-month to $1,444,169 in May 2022 and is well below the peak of $1,679,429 reached in February. Compared to last year, the average price in May is up 10%.
The median house price in May was $1,251,000, up 10% over last year, but below the peak of $1,485,000 reached in February.
The median is calculated by ordering all the sale prices in a given month and then selecting the price that is in the midpoint of that list such that half of all home sales were above that price and half are below that price. Economists often prefer the median price over the average because it is less sensitive to big increases in the sale of high-end or low-end homes in a given month which can skew the average price.
Condo (condominiums, including condo apartments, condo townhouses, etc.) sales in the Toronto area in May 2022 were down 35% over last year and well below pre-Covid sales volumes for the month of May.
New condo listings were up 3% in May over last year and well ahead of historical listing volumes for the month of May.
The number of condos available for sale at the end of the month, or active listings, was up 21% over last year.
The MOI increased to 2.5 in the month of May.
The share of condos selling for over the asking price declined to 50% in May.
The average price for a condo in May fell to $795,409, down from the peak of $840,444 in March. The average price is up 13% over last year. The median price for a condo in May was $720,000, up 13% over last year, but down from $777,000 from the March peak.
While average prices were up on a year-over-year (YOY) basis across all five regions in the GTA, sales were down significantly and inventory levels were well ahead of last year’s level, indicating some market slowing.
While condo sales were down across the GTA, average prices continue to be up double digits in all five regions. Current MOI levels are well above 1 across the GTA, signalling a slowing market.
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