The good folks at the Toronto Regional Real Estate Board love tracking real estate stats and we love going over them!
Below are a table and a graph showing the number of sales as well as the average price for a home in the GTA, going back all the way to 1977. Take a look and then we’ll share some interesting insights that came out of our analysis.
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There’s some very interesting things that come out when we look at the above data.
It’s 7%.
Since 1978, the average price for a home in the GTA has gone up by 7% per year on average. Some years more, some years less, but when you average it out, real estate in the greater Toronto area has appreciated at the rate of 7% per year in the last 45 years.
That means prices double in about ten years.
There’s a handy quick rule for figuring out how long it would take for the value of an asset to double. It’s called the Rule of 72 and all you need to do is take 72 and divide it by the rate of return. With an average increase of 7% per year, it would take just over 10 years for the price of homes to double.
In seven of the last 45 years the average price actually dropped.
When we look at the data, we have seven years in which the average price for a home in the GTA went down on a year over year basis. All but one of those years can be found in the 1990s. After four years of huge price increases in the late ‘80s, 1990 saw the start of four consecutive years of price drops. 1994 saw it go up by 1% and then there were two more years of price drops. Once we hit 1997, the market began to rise again and we saw two decades of price increases every year. If you have ever wondered why we think real estate always goes up in value, it’s because for the last twenty-five years, it has only gone down once! In 2018, the average price dropped by 4%, but it recovered the following year and has been going up ever since.
If owning a home was a job, it would have paid $25,000 a year.
in 1977, it cost about $65,000 to buy a home on average in the GTA. As of 2022, the average price had risen to about $1.19M. If we look at it another way, if you bought a home in 1977, you would have made $1,125,000 in appreciation over that time. Divide that by the 45 years that have passed and you’d have made about $25,000 a year on simply owning the home.
Look at the actual dollars, not just the percentages.
The final interesting thing we noted in the data has to do with the average price in actual dollars. Headlines often talk about percentage increases and compare it against prior years. While that is interesting and a good way to try to compare apples to apples, it can also be misleading. In 2022, the average price went up by 9%, but in real dollars it was about $94,000. Twenty years before that, back in 2002, the average price also went up 9%, but with an average home price of $251,000 the year before, that 9% increase only equaled $23,000 in actual dollars. Make sure that whenever you see comparisons to prior years that just reference percentage changes, you also consider the actual dollar changes.
We hope you enjoyed the stats and insights we pulled out of this dataset. We love reviewing real estate data and in our work with our buyers and sellers we do a lot of it! If you’re thinking about making a move, get in touch with us so we can crunch the numbers for you.
