Toronto area prices fell slightly in November but were about 8% higher than the same time last year. This continues the trend that has been followed throughout this year, with prices each month 7-9% higher than the corresponding month in 2013. Based on this eerily consistent pattern, I can predict with some confidence that average prices will fall to somewhere in the $555,000-$565,000 range in December, which will be 7-9% above last year.
The trend for inventory has been equally consistent. There were 2.3 months’ supply of homes for in November, about 10% below the 2.5 months’ supply in November 2013, while total sales in November were actually about 2% higher than last year. This continues the year-over-year pattern of lower inventory combined with higher sales each and every month this year. Needless to say, we continue to enjoy(?) an exceptionally strong sellers’ market.
The seasonal pattern is exceptionally clear: very active spring (February-June) and fall (September-November) markets separated by slower periods in summer (July and August) and over the holiday season (December and January). There are obvious natural elements to this pattern: we like to take advantage of our relatively short summers; and we like to celebrate over Christmas & New Years. However, the pattern is being further strengthened by market-timing sellers who ‘know’ that spring and fall are the best times to sell and avoid summer and Christmas if they can. This has created a self-reinforcing cycle that tends to amplify the differences between the ‘hot’ and ‘cold’ seasons from one year to the next.
So, barring an increase in interest rates over the next few months (extremely unlikely), or a sharp change in the world economy (perhaps not quite so extremely unlikely), we are in for another hot spring market next year, beginning late January or early February.