It’s interesting: the Toronto market has been so amazingly consistent and predictable over the past several years, these monthly updates almost write themselves. Once again, the price and inventory trends for October have closely matched the pattern in 2013 and 2014, just shifted upward. If you wanted to nit-pick, you could say that the average price in October was only 7% higher than last October, whereas year-over-year increases have been consistently in the 10-12% range over the past several months. However, comparing with two years ago, the increase was 17%, exactly in line with the 17-20% from 2013 to 2015 since early this year.
Sales were also higher than last year and, at 8,804 units, set an all time record for the month of October. Despite that, the inventory of homes for sale, at 1.8 months, was again lower than last October and, in fact, lower than at any time in the past two years. Lots of homes are coming up for sale, but they are selling so fast that the number for sale at any give time is falling.
A loud chorus of voices (the latest being the CMHC itself) has been saying for several years that the Toronto market is overpriced based on any number of metrics. Certainly it seems almost self-evident that prices cannot continue to increase by 5-10% annually while average incomes are increasing by 1-2%; eventually brute affordability must put a ceiling on prices. At a minimum, then, we should expect prices eventually to stop rising so quickly and hopefully level off in a smooth ‘soft landing’. The longer they continue to rise steeply, however, the smaller the chances of such a comfortable outcome. It is my fervent hope, therefore, that the new year will finally see a more ‘normal’ market (if that term can even be used anymore), with prices rising only modestly and with a better balance between buyers and sellers.