June was a really hard month, I'll be the first to admit it.
And if you would have asked me today what I thought the GTA average home price would be in June, I would have said it would fall significantly.
It's amazing to see how quickly the market can change – after about four months of working in a seller's market where “offer nights” and multiple offers were the norm, June 1st rolled around and everything changed.
Whether this has had an impact on prices remains to be seen, but it has significantly changed the process of selling property.
I had clients who were getting ready to sell their east side home and I was preparing them with a realistic outlook on what to expect.
I shared a Microsoft Excel worksheet through Google Drive and started tracking every listing on the East Side under $2 million, hoping to give people a real-time look at how homes were selling there, and the results were fascinating.
One of the most important metrics we were tracking was the success or failure of “offer date” – price aside, knowing how a property is selling (or not) can be very important.
In the first week, we noticed that only 30% of offer days were working.
By the second week, that figure had dropped to 24%.
And in the third week, only 18% of properties with offer dates set sold on their respective “offer date.”
Of course, we listed the property with an offer date because it would be rather awkward and confusing for our buyer base to see a newer, better looking property hitting the market at a higher price without an offer date listed.
We received two offers the night of the offer, accepted neither, and sold our house a few days later.
As for prices, I'm not going to lie and say, “We have more money now than we did in the spring!” The market has changed, there is a ton of inventory, and prices are dropping.
I feel like we're about 2.5% below where we would have liked to be in March or April. It's actual money on the table, but in terms of asset values, it's only 2.5%.
It is impossible to “time the market.” Imagine being a seller and watching the market go up in February, March, April, May…
…When do you want to sell your house? When will you make the decision?
Of course, not everyone has the option to wait 4-6 months – some are selling because they bought, others are selling because they're starting a new job in Boston in 2 weeks.
But history shows that average home prices were bound to fall through May and June no matter what, and I'll explain why in a moment.
June showed that while prices have been moderately affected, the process of selling property is now significantly different: sales are down, listings are up, and real estate agents can no longer be expected to sit and wait with a sign on the lawn in front of a house.
In June we also found that there is currently a huge spike in days with no offers going through, which is having a major impact on the “new listings” statistics. Think about how many “new listings” there are when there are so many days with no offers going through and properties are being relisted. Sure, they are “new” listings in the TRREB statistics, but they are not.
right?
I will return to this point at the end when I share with you an interesting statistic that TRREB introduced two years ago.
But let's start as always with the average selling price in the GTA.
As I said, I expected this decline to be more pronounced, but prices appear to be sticky (in economic terms).
According to Investopedia:
Price stickiness refers to the lack of rapid changes in market prices, even as changes in the economy as a whole suggest that a different price would be optimal.
“Stickiness” is a general economic term that can apply to any financial variable that resists change. When applied to prices, it means that buyers or sellers of a particular good are reluctant to change their prices despite changes in input costs or demand patterns.
That's true.
Sales are down, inventory is up, and the average home price is down just 0.3%.
Last month in this column I said:
Sales are at an all-time low, but prices are not only stagnating but are actually increasing.
This doesn’t line up with the laws of supply and demand that we have studied, but we can’t conclude anything other than that the Toronto market is resilient.
I've since received criticism in the comments section from people I feel are supportive, but I think more readers might have nodded in agreement if I'd provided a definition of “price stickiness” last month.
There were nine listings last week.
But only two of those clients “need” to sell to them.
That's what's different in this market. Sellers aren't forced to accept a lower than they want price, they can withdraw their listing and sell this fall or next year. I have to think that this is impacting price stickiness.
Of course, I said above that the price drop from May to June was almost automatic given the history of the past 22 years.
Prices have fallen between May and June for 19 of the past 22 years, and that massive 7.8% increase seen in 2020 was due to the COVID-19 pandemic.
The 0.3% decline was lower than expected, but the stats may be lagging the market a bit.
In terms of TRREB districts and their respective pricing, here are the numbers for May-June:
For a change, it's very interesting to see 416 on the right side of the chart.
But the 416 is still leading the way so far this year.
While most people are primarily interested in the pricing data, since 2023 I have been obsessed with these sales figures.
April was the month with the lowest sales of any month this century.
The same is true for May.
Will June buck the trend?
no.
far cry…
I got it!
This is yet another month with the lowest sales since I started tracking this data in 2002. People often ask me why I start with 2002, and that's partly because the data in the TRREB archive is unreliable (i.e., some months are incomplete) and partly because in 1999 the city was probably half the size, so why bother starting in 2002?
Sales were down 11.4% month over month, but looking again at historical trends, that's not surprising.
There have been 16 sales declines between May and June in the past 22 years, and the pandemic-hit 2020 figures once again look downright absurd.
But you get the point, right?
On the other hand, we expect sales to decline from May to June, so an 11.4% drop isn't a big deal.
Meanwhile, sales remain at record lows.
Here are the latest tallies for 2023 and 2024:
Monthly sales began 2024 with year-over-year increases, but declined in March and have continued to increase since then.
2023 will see the lowest sales numbers since 2000, and, for now at least, sales are on pace to decline even further.
That's shocking.
Considering inventory levels, it's shocking that prices have not been affected.
There were 17,964 new listings in June, the second highest number since 2002.
So what happens if you have high inventory and low sales?
First, your inventory will grow. Your number of active listings will grow every month.
But that means the absorption rate is reduced.
There were 6,213 sales in June and 17,964 new listings, an absorption rate of just 34.6%.
Remember, anything below 50.0% indicates a buyer's market, at least in theory.
So where does June's 34.6% rank historically?
If you guessed “at the bottom,” you're correct.
More importantly, absorption in June was 34.6%, down month-on-month from 37.7% in May.
In fact, absorption rates have been declining throughout 2024.
Again, it is important to point out that despite this data, prices remain stable.
But there's one last statistic I want to share with you today, and that's something I mentioned at the beginning about relisting.
Consider that in June, there were far more properties listed that had offer dates that fell through and were then relisted.
I've always wondered about this data.
And thankfully, TRREB began tracking relisted shares in May 2022.
What percentage of properties do you think were relisted in June?
10%? 20%?
What do you consider to be a significant number?
How about 30.0%? That's the number of properties relisted in June, a whopping 5,390 out of a total of 17,964.
Nearly a third of the “new” listings were not actually new, which says a lot about the market in June.
And when we look at the relisting share from the spring market opening in February to now, we see a clear trend.
Almost a third. That's shocking to me!
In case you're wondering, the highest record was recorded in Orangeville, with a relisting rate of 40.4%, meaning that 40 of the 99 “new listings” were actually properties that had been listed previously.
We only have the past year to compare this data to, but when plotting 2024 against 2023, this year certainly feels different.
Note that the two lines began to diverge in March.
Then in April, the number of relistings will be 2.5 times higher than last year.
If you love statistics as much as I do, this is a cool new toy! I wish TRREB had been tracking this for the last 10 years, but I'll do whatever I can now.
So basically, the situation is the same as last month: sales are low, inventory is high, and prices remain high (stable?).
If you're a buyer, this summer will be an active one.
If you're a seller, this summer will be active in terms of preparing for a fall listing.
Everyone, school is out for summer!