2017 was another banner year for property sales in our region with a new MLS® benchmark of over 1 BILLION in sales achieved! This is up 5% from 2016 which was also a benchmark year, a 36% increase from 2016, and a 64% increase over 2014. It is worth noting that this record was achieved in spite of a significantly reduced supply of properties available for sale across our region.
Continued low supply and high buyer demand drove price increases to levels we have not seen before. The average price across our region was up a whopping +23% over the previous year! A notable call out is the huge growth we witnessed in total unit sales at higher price points including; 1-1.5 million showing a +63% increase over the previous year and sales from 1.5-2 million showing a +71% increase!
Suffice to say that, overall: 2017 volume sales were stellar; unit sales, while down from 2016, were good and, given such huge demand in Q1/Q2, would’ve been higher if there had been more homes for sale. Generally, in 2017 homes sold faster than ever before and for a lot more money. It was a great year and, as we’ll see, one that taught us something about our connection to the Greater Toronto market.
In More Detail:
So what made 2017 so atypical? Simply put, the sales year was split down the middle into two halves with very different characteristics. The first half, January to June, gave us six new monthly sales records. Actually, they were the last six months of 39 straight monthly sales records which began in March 2014. This unprecedented streak gave us three periods with dizzying numbers of multiple and over-asking price offers, but none more intense than January to May of 2017. Two examples: January sales were up 44% from January 2016’s record, but on 32% fewer new listings and with a 36% average sale price jump year-over-year; March was even wilder, with volume sales up 67% and unit sales up 48% over March 2016’s records, but with 20% fewer new listings than 2016.
Three main developments put an end to this extraordinarily overheated sellers’ market, there by initiating the second, very different half of the 2017 sales year:
1) A kind of collective burnout among buyers, sellers and agents. The months of frenetic activity and stress, as well as the frustration from repeat failed offers in multiple offer situations, took their toll.
2) A growing concern in late spring that the GTA market had become overpriced and was slowing. The Toronto Real Estate Board (TREB) numbers for May – the first released after the Ontario Fair Housing Plan was rolled out – showed GTA residential sales down 20% from May 2016, with active listings up 43% and an average price drop of 6% from April. The numbers were accompanied by stories of sellers who had reduced their prices but still couldn’t sell, many having already bought their next homes before the prices had dropped. Nest eggs were taking a hit.
3) On July 12th the Bank of Canada raised its key interest rate by 0.75% — the central bank’s first move upward in seven years – with Canada’s big five banks then raising their prime rates. The second and third developments in particular seemed to spook the Georgian Triangle market a little, partly because no one was certain what impact they would have and then the GTA market kept getting gloomier. According to TREB Market Watch, unit sales fromMay to December were DOWN an average of 27% each month year-over-year from 2016, while active listings were UP an average of 83% year-over-year each month. In fact, in December there were172% more active listings in the GTA than in December 2016. As for the average sale price, December’s$735,021 was down 25% from its April high of $920,791. Brutal numbers to say the least.
Now let’s look at our Georgian Triangle numbers from the second half of 2017. Q3 sales did slow considerably from 2016, with volume down 20% and units down 31%. However, that actually says more about Q3-2016’s huge record sales. For Q3-2017’s volume sales of $247,299,444 were the second best ever and, unlike the GTA’s falling average sale price, ours was still up 22% over Q3-2016.That brings us to Q4, with local market watchers wondering whether our sales would drop further due to the Georgian Triangle’s proximity to, and dependence upon, the GTA market. So what did October give us? A record month, with $99,404,833 in volume sales (up 5% from 2016’s prior record), a very high 81% sales/listing ratio and an average sale price of $457,267, up 23% year-over-year. Regarding Q4 overall, GTA sales were down 17% from Q4-2016, new listings were up 28%, and total active listings were up 109%. That’s A LOT of inventory. And while December’s average sale price was up .7%, as noted earlier it was down 25% from April. By comparison, Georgian Triangle Q4 sales were down 6% from Q3-2116, new listings were down 16%, total listings were down 4% and the average price was up 22%. So if anything, we were short on inventory despite prices being way up.
Why is this important? Mainly because it demonstrates that while our Georgian Triangle market is dependent on the GTA market, it is by no means in lockstep with it. Although our market slowed in Q3 and Q4, unlike the GTA our listings count did not climb steeply but remained at shortage levels; and our average sales price did not fall 25% from the Spring, but actually rose 1% from the extremely overheated market we saw from January to May. In short, unlike the GTA we are still looking at a sellers’ market with healthy demand. So the GTA’s precipitous downturn for most of 2017, as well a sour market’s response to it, seems to have taught us a lesson that we could not have learned in any other way: our regional fundamentals are such that, to the pleasant surprise of many home owners and agents alike, we have maintained a very resilient, relative independence from the GTA. Indeed, is it not possible that our market – given that its recent growth has been built on solid demographics– will appear even more attractive to affluent GTA boomers trying to decide whether to escape the congestion and re-locate to this incredibly beautiful region with all that it has to offer? Time will tell, but given the Georgian Triangle’s great value and potential, things are looking up.
Early 2018 numbers are already indicating that this year will likely be another strong one in our region. The market continues to favour sellers with demand exceeding supply (62% Sales to Listing Ratio for January). If we do not see a surge in listings available for sale we will likely see prices continue to rise. Recent government interventions and rising interest rates we expect will have some impact but we expect the overall impact to be somewhat short-lived. A strong economy and several demographic factors such as baby-boomers cashing out in Toronto and more millennials entering the home market will continue to drive the growth in our region.