Without a doubt, 2020 is getting off to a very unusual start. Whether it’s detached houses, semi-detached, townhouses or condominiums, you should know exactly what is going to happen next.
Good news, we’ve been reviewing the market stats and here’s what we’re predicting will be happening over the next couple of months in Toronto. If you’re more interested in what’s going on in another part of the GTA, get in touch with us so we can look at the market data for your neck of the woods. It’s not a lot different than what we’re seeing in Toronto, but there are some regional aspects we should go over.
Now, on with what we’re seeing in Toronto for the different housing types. No charts, no graphs, just what you should know.
Detached Houses
December 2019 saw the lowest number of new listings (just 366) for detached houses come on the market since 1996.
1996.
In fact, it might even be earlier, but TREB only has digital data we can search going back to 1996.
At the same time as pretty much everyone decided to not list their detached home for sale, the average sale price went up to $1.36M. That’s the 8th highest price we’ve ever seen for detached homes in Toronto. After a bumper 2017, it was only the height of the spring market in 2018 (May) and 2019 (May) that saw higher prices. It’s super unusual to see this happen in December.
We’re going to be watching what the January stats tell us with great interest, as we’ve got a predictive indicator that says prices should be skyrocketing up.
The Sales to New Listing Ratio (SNLR) tells us how many of the sales we saw this month were new listings in the month versus existing listings that had been on the market from previous months. It’s considered a strong predictor of what happens in the next month because it tells us if inventory is sticking around or selling quickly.
- If the SNLR is around 50%, we have a balanced market, with sales equal to half the number of new listings coming on the market. A good amount of sales and a good amount of new options means reasonable price increases.
- Over 50% is heading towards a seller’s market, as we have sales outpacing the new inventory coming on the market. In extreme cases, we can have an SNLR of over 100%, which means we saw more sales in a month than inventory came on the market, meaning next month is very likely to see a price increase.
- Under 50% tells us that the we are headed towards a buyer’s market. The lower the SNLR, the more of a net increase in properties available the following month. This means prices typically drop as buyers react to having lots of choices by pushing down the price they are willing to pay.
In December, the SNLR for Detached houses was 127%. That’s the second highest ever and means we’re absolutely heading towards a strong seller’s market. The only other time it was higher was in December 2016, which was right before we saw a massive run up in prices.
The moral of the story is that if you’re looking to buy a detached home, make the move ASAP or take a seat on the sidelines as the next few months are bound to be very challenging for buyers. If you’re thinking about selling, get the paint brushes out and get the home ready, because we’re about to see an amazing opportunity to sell.
The story for semi-detached is even more pronounced than what we’re seeing with detached houses.
Semi-Detached Houses
December 2019 also saw the lowest number of new listings (just 77) for semi-detached houses come on the market since 1996.
Nobody wanted to put their semi on the market, and at the same time, we had near record sales of semi-detached houses, with 126 sales in December 2019. This leaves us with only 80 semi-detached houses on the market.
We’re going to be watching what the January stats tell us with great interest, as we’ve got a predictive indicator that says prices should be skyrocketing up.
The Sales to New Listing Ratio (SNLR) tells us how many of the sales we saw this month were new listings in the month versus existing listings that had been on the market from previous months. It’s considered a strong predictor of what happens in the next month because it tells us if inventory is sticking around or selling quickly.
- If the SNLR is around 50%, we have a balanced market, with sales equal to half the number of new listings coming on the market. A good amount of sales and a good amount of new options means reasonable price increases.
- Over 50% is heading towards a seller’s market, as we have sales outpacing the new inventory coming on the market. In extreme cases, we can have an SNLR of over 100%, which means we saw more sales in a month than inventory came on the market, meaning next month is very likely to see a price increase.
- Under 50% tells us that the we are headed towards a buyer’s market. The lower the SNLR, the more of a net increase in properties available the following month. This means prices typically drop as buyers react to having lots of choices by pushing down the price they are willing to pay.
In December, the SNLR for Semi-Detached houses was 163%. That’s the highest ever and means we’re absolutely heading towards a strong seller’s market. To put that in perspective, for every 10 semi-detached houses that came on the market in December, 16 sold.
What’s it mean to us? If you’re looking to buy a semi-detached home, you might have to consider a townhouse instead as you’re going to have very few options over the next couple of months. If you’ve been thinking about putting your semi on the market, without a doubt, this is a good time.
Let’s take a look at whether townhouses are showing a similar story.
Townhouses
December 2019 saw the second lowest number of new listings (just 30) of townhouses come on the market since December, 1998.
We now have the third lowest number of active townhouse listings on the market in our history, a grand total of 47.
We’re going to be watching what the January stats tell us with great interest, as we’ve got a predictive indicator that says prices should be skyrocketing up.
The Sales to New Listing Ratio (SNLR) tells us how many of the sales we saw this month were new listings in the month versus existing listings that had been on the market from previous months. It’s considered a strong predictor of what happens in the next month because it tells us if inventory is sticking around or selling quickly.
- If the SNLR is around 50%, we have a balanced market, with sales equal to half the number of new listings coming on the market. A good amount of sales and a good amount of new options means reasonable price increases.
- Over 50% is heading towards a seller’s market, as we have sales outpacing the new inventory coming on the market. In extreme cases, we can have an SNLR of over 100%, which means we saw more sales in a month than inventory came on the market, meaning next month is very likely to see a price increase.
- Under 50% tells us that the we are headed towards a buyer’s market. The lower the SNLR, the more of a net increase in properties available the following month. This means prices typically drop as buyers react to having lots of choices by pushing down the price they are willing to pay.
In December, the SNLR for townhouses was 146%. That’s the second highest ever and means we’re absolutely heading towards a strong seller’s market. The only time it was higher was back in December, 1996. Back then, we had 1.9 months of inventory, and now we have about half, with only 1.1 months of inventory.
The key take-away is that townhouses are likely to go up considerably in price over the next little while. Townhouses are the last type of housing stock before buyers have to consider a condo instead and that leads us to what is going to happen with condos.
The final housing type we need to examine is condominium apartments. The story is different but also points to what comes next.
Condominiums
December 2019 saw low numbers of new listings as well as active listings but not the dramatically low numbers we’ve seen in other housing types. The average price actually dropped a tiny bit, now at $656,000.
The only unusual stat is the same predictive stat we’ve been talking about with the other housing types.
The Sales to New Listing Ratio (SNLR) tells us how many of the sales we saw this month were new listings in the month versus existing listings that had been on the market from previous months. It’s considered a strong predictor of what happens in the next month because it tells us if inventory is sticking around or selling quickly.
- If the SNLR is around 50%, we have a balanced market, with sales equal to half the number of new listings coming on the market. A good amount of sales and a good amount of new options means reasonable price increases.
- Over 50% is heading towards a seller’s market, as we have sales outpacing the new inventory coming on the market. In extreme cases, we can have an SNLR of over 100%, which means we saw more sales in a month than inventory came on the market, meaning next month is very likely to see a price increase.
- Under 50% tells us that the we are headed towards a buyer’s market. The lower the SNLR, the more of a net increase in properties available the following month. This means prices typically drop as buyers react to having lots of choices by pushing down the price they are willing to pay.
In December, the SNLR for condos was 113%. That’s the second highest ever and definitely means we’re also going to see a seller’s market for condos, just not as crazy as with the other housing types. The only time it was higher was back in December, 2016, right before we saw the market take off. Back then, we had 1 month of inventory, and now we have a bit more, with 1.3 months of inventory.
The story is definitely different for condos than for detached, semis or townhouses right now, but we expect to see that change over the next couple of months. Simply put, as buyers are pushed out of the various housing type markets by higher prices due to limited supply, they look for cheaper options in the property type down the property ladder. Buyers who can’t afford a detached anymore start competing for semis, which contributes to pushing some buyers down to townhouses, which pushes them into the condo market. The only saving grace is that we have a higher supply of condos in Toronto to absorb some of that pressure, but prices are still going to be pushed upward.
We’re expecting that as we see higher prices, sellers who were considering moving up the property ladder will decide to stay put, reducing inventory and putting further pressure on the prices upward. There will be opportunities for sellers who own properties with fundamental challenges (location, size, lot dimensions) to sell and get a much better price than they could normally expect to receive. Stay tuned!
