By: Desmond Brown
DOWNTURN IN THE MARKET: Cause for Concern?
Tags: Buyers, Sellers, City of Toronto, Toronto Real Estate, In the News
Recent headlines have screamed prices are down 12% compared to a year ago. Is this the beginning of a huge collapse in Toronto's real estate market? Has the bubble finally burst? Well, after working in the media for 11 years, I know how newsrooms work.
A lot of the reporters assigned to the real estate story after a news release from the Toronto Real Estate Board simply look at the decline in prices and then write a story around it. Before we all go into panic mode and start kissing away the equity we have built in our homes over the past year, let's take a deeper look at the numbers.
As I've mentioned, according to the Toronto Real Estate Board, prices are down compared to a year ago, but it is important to remember that 2017 was off the charts! In April 2017, we recorded a record peak average price of $918,184. This year that number fell to $804,584. I believe that for us to put all of this into perspective, we have to look back two years to 2016, when the market was what we consider, in Toronto terms, more normal. Let's ignore the 2017 numbers.
In April 2016 in the City of Toronto, we recorded 4,248 sales with an average price of $766,472. This April, we sold fewer houses, 2,946, but the average price was $865,817.That's a 12.96% increase compared to two years ago.
Our downtown condo market has done even better! In April 2016, 764 units sold for an average price of $474,298. There were less overall sales this April, with 587, but the average price was $660,051, a huge increase of 39.16%!
Another thing to take into account is that the TREB numbers include outlying areas such as York and Durham regions, where prices have really suffered. In the City of Toronto, it's a different story.
Why is the City of Toronto bucking the trend that's hitting some of the surrounding areas? It is important to be mindful of the following:
- The Toronto, Ontario, Canadian and global economies are healthy and strong
- Unemployment is at record lows
- Approximately 100,000 people are moving into the City of Toronto each year and not nearly enough housing is being built to meet the demand
- Interest rates, while higher, are still very low
All of this is proof we have the conditions for a strong and healthy market. Homes in good neighbourhoods are still selling quickly and often for over the asking price, so don't worry about the doom and gloom headlines. Real estate values will go through some ups and downs, but look a the big picture and consider it a long-term investment. If you approach it this way, your equity is safe.