The monthly average sale price had been on a downward spiral ever since the provincial government announced the introduction of a 15 percent foreign buyers tax on April 20th.

In September the average sale price came in at $775,546. September’s average sale price was 6 percent higher than August’s average sale price, and almost 3 percent higher than the average sale price achieved in September, 2016. This is a welcome change, and the first step to the resale market’s return to normalcy. Not the frenzied market that we experienced from January through April, but the 2016 market, that saw property values rise in a moderate, sustainable way.

Although the market did recover in September, the recovery remains fractured, with some sub-markets out performing others. On the broadest level, the 416 area code, as a trading district, is outperforming the 905. Sales volumes for the greater Toronto area were down 35 percent compared to last year. This September 6,379 properties were reported sold, last year there were 9,830. Comparing the 416 and 905 trading areas, a different picture emerges.

Whereas the overall market was o by more than 35 percent compared to last year, the 416 trading area had only declined by 29 percent. The 905 trading area did not fair as well, with sales o by almost 40 percent. The same is true for average sale prices.

As indicated above, the monthly average sale price for the greater Toronto area was $775,546, up 2.6 percent compared to last year. On an unweighted basis, the average sale price for all properties sold in the 416 region increased by almost 10 percent compared to last year. In the 905 the increase was slightly less than 6 percent. So clearly the numbers emerging from the 905 region are acting as a downward drag on the results of the overall resale market place.

But even within the 416 trading districts there are regional differences. Sales of detached properties were down by 41 percent in September. The volume of semi-detached properties sales was down by only 15 percent, and 23 percent for condominium apartments. Average sale prices for detached and semi-detached properties rose by 4 and 5 percent respectively compared to September 2016, whereas condominium apartment average sale price rose by 24 percent compared to last year.

Notwithstanding the negative press concerning the Toronto resale market place and its “collapse”, house prices in Toronto continue to be very expensive, but given prevailing interest rates, still sustainable. In September the average price for a detached home in Toronto’s 416 region was $1,355,234. The cost of a semi-detached home was not far behind at $935,467. Even condominium apartments are becoming pricy. In September, the average price for a condominium apartment was $554,069. In Toronto’s central districts, where most of Toronto’s condominium apartment towers are located, the average price for a condominium apartment was $615,654. There were 917 sales in this category, almost 1/6 of the total inventory of properties sold in September. Notwithstanding these elevated prices, all the condominium apartments sold for 100 percent (on average) of their asking price.

On the freehold side, the region just to the east of the central core, comprising the neighhourhoods known as Riverdale, Leslieville, and the Beaches, continues to trade as if the downturn experienced everywhere else in the greater Toronto area miraculously missed it. In September all detached properties in these areas sold for almost 104 percent of their asking price and in a mere 14 days. Semi-detached properties moved even faster. Semi-detached properties in these neighbourhoods sold in just over 8 days and for sale prices that exceeded the asking price by more than 105 percent. The average sale price of detached and semi-detached properties reported sold in these neighbourhoods was $1,286,000 and $928,000 respectively.

Over the last 5 months the market has moved from an insane seller’s market to a more nuanced, balanced market (except of course in Riverdale, Leslieville, and the Beaches). In September, 16,469 new properties came to market, an increase of more than 9 percent compared to the 15,050 that came to market last year. At the end of September there were 19,021 properties available to buyers, a stunning increase compared to the paltry 11,255 available last year. In percentage terms, availability has increased by 69 percent, year-over-year.

Needless to say, with an increase in supply, both average days on the market and months of inventory have increased dramatically. Year-over-year days on market have increased from 16 to 24 days. Months of inventory, calculated on a 12 month moving average is now 1.5 months for the greater Toronto area. Months of inventory, using September data, is more like 3 months, a much more accurate reflection of the market than the 12 month moving average.

The market is normalizing. It will continue to improve moderately, as year-end approaches. Sellers hoping for the heady days of January through April will be disappointed. In addition to assimilating the impact of the foreign buyers tax, the Toronto market has had to contend with two quarter-point mortgage interest rate hikes, and potentially more to come. There is also the looming threat of additional stress testing which the Office of the Superintendent of Financial Institutions has proposed. All of these factors will have a moderating effect on the residential resale market going forward.

The Enhanced Statistics Statistical Query Report released by the Quinte & District Association of REALTORS® (“the Quinte Board”) for September confirms that at month’s end only 74 new listings came onto the market which is 20% fewer than last year when 92 were listed. And that is a significant negative differential from a season where properties were already in short supply. Year to date, the number of new listings is down by 5% (1002 compared to 1050 last year at this time). Available inventory, however, is for all intents and purposes on par with last year’s tight market conditions with 371 active listings being reported at the end of the month compared to 359 last year, constituting a negligible 3% differential, likely attributable to a combination of scarcity of supply and decline in sales.

As indicated, sales are down with 51 being report in September 2017 compared to 72 in the same month in 2016, a decrease of 29%. Year to date, because of the particularly strong sales recorded earlier in the first half of the year, 2017 and 2016 numbers are virtually a wash at this point (down only 1%) with 524 sales thus far compared to 531 at this time in 2016. But a review of other statistics produced by the Quinte Board tracking market performance in the County reinforces the comments made in last month’s report that lower sales are due to a variety of factors, some of which are set out above, and do not in and of themselves a single picture paint. Rather, for a more complete and informed assessment of the market other indicators must be consulted for a balanced perspective. For instance, the average days on market for properties sold in the month continued to go down year over, selling on average in only 65 days compared to 84 days in September the year previous, that is 23% faster. In addition, strong demand and limited supply continued to push prices up. According to the Enhanced Statistics Statistical Query Report the average sale price of properties sold in September 2017 was $366,196 which is 18% higher than that recorded by the Quinte Board in September 2016 when it came in at $309,960. Neither of these figures are indicative of a market in distress, but rather suggest that market fundamentals in the County remain healthy and strong.

In the latest news feeds, commentators have noted that buyers appear to be returning from the sidelines in urban markets with an uptick in prices and reports of stronger sales benchmarks being established, particularly in the more affordable central condominium and town house markets, giving confidence to market participants that despite two recent interest rate hikes by the Bank of Canada, the impact of recent uncertainty and instability has largely been absorbed and processed. This will inevitably translate to more positive market performance in the County moving forward. One potential unknown and potential dampening influence on buyers entering the market is the proposal by the Office of the Superintendent for Financial Institutions to extend existing stress tests beyond high ratio mortgages to conventional ones, requiring all borrowers to qualify at the higher posted rather than the discounted lending rates, regardless of the amount of their down payments. Given the recent reports regarding the rebound and stabilization in the real estate market, the likelihood of these proposals being implemented is increased. As is always the case, time will tell.