In a continuation of the ‘return to normal’ trend that we have seen since early this year, Toronto area prices and sales in October were higher than both the previous month and the previous year. The seasonal pattern that we saw repeated year after year over the past 20 years (up until the bubble started forming in late 2016) has reasserted itself: lower prices in December/January and July August; and higher prices in February-June and September-November. Accordingly, we can expect that the market will begin slowing down later this month, and pick up again by mid-February. While further increases in interest rates could lead to a more-tepid-than-usual spring market next year, there are good reasons to believe that the pace of these increases will slow in the coming months, viz., falling oil prices, declining auto sales, elevated inventory levels, slowing rate of growth in wages, and falling participation rate (proportion of working age Canadians working or looking for work). All of this points to weakness in the economy over the coming months and probable delays in future interest rate increases.
Condo apartment prices increased significantly in October, still showing no signs of the weakness that developed in the freehold side of the market following the bubble burst last spring. Condo prices remain close to the all-time high reached in June of this year, and higher than last year’s bubble peak. Freehold prices, on the other hand, have been tracking very close to last year for the past four months.
Overall the market remains balanced, with the inventory of unsold homes hovering just below the 3 months’ level that represents the dividing line between a sellers’ market and a buyers’ market. This is perhaps the healthiest market that we have seen in a long time – hopefully it will continue in this vein next year!