August 2022 Market Update
What trends are we seeing?
Multiple offers are back!? It is hard to imagine given the headlines we read relative to the change in number of transactions month-over-month and relative to the same month of the prior year; however, there are multiple offer situations occurring again. What is notable is that these multiple offer situations are allowing for buyers to have conditions or seller’s not accepting any offers despite market value being reached as their price expectations may have been more in alignment with the frenzied February 2022 atmosphere.
What lies ahead for 2022?
Rate increases are expected to continue throughout 2022 and into 2023. Some buyer’s who have pre-approvals in place may re-enter the market more aggressively than previously thought as the realization that the reduction in selling price which they have anticipate is not coming to fruition and the cost of borrowing is increasing making it more expensive for them to accomplish their lifestyle goals the longer they wait. Notable is that there has been an increase in viewings and transactions at higher price points which is propping up and skewing the average price of sold properties. The underlying message seems to be that buyers and sellers have decided to move forward with their lifestyle and real estate goals despite a complex real estate and greater macro economic, political and social environment.
What is Happening with Sale Prices?
The average sale price across all property types on the Toronto Regional Real Estate Board (TRREB) for August went up by 0.9% year-over-year to $1,079,500 in August 2022 from $1,070,201 in August 2021. Month-over-month we saw a 0.5% increase from July 2022 to August 2022. The illustration below compares the average sale price changes from August 2022 to August 2021, and July 2022 to August 2022, in Toronto and the Greater Toronto Area (GTA) broken down by product type:
Number of Transactions Overview
The often used “eye catching” headlines you see in publications are rooted in the number of transactions year over year. The declining trend in number of transactions from the same month of the prior year continued in August 2022 with a decrease in number of transactions by 34.2% in August 2022 compared to August 2021. The illustration below indicates the difference between the two most recent calendar years for the same month and month with respect to transactions, new listings and active listings.
When comparing number of transactions from the same month year over year knowing that the prior year was a record setting year, the headlines will always draw eyeballs. Those figures should not be discounted, however, a more micro lens of activity level relative to the prior month may be useful in predicting the markets next steps from an activity level and then subsequently from a price perspective. As illustrated below, number of transactions have increase relative to July 2022 and the number of properties presented to buyers decreased. This ties in well to the trend noted above relative to multiple offers reappearing.
Below we see the change in average sale price leading from month to month, starting from the peak in February 2022 up until August 2022. We also see the overall percentage change from February to August, which illustrates the current opportunity for buyers as prices seem to be on the upswing.
The average price from July to August increased by +0.44%! Is this an indication that the market has hit rock bottom and the recovery cycle is starting? This may be an opportunity for buyers to take advantage of the current market!
Footnote: Source of statistical data is from the July and August 2022 Market Watch report of the Toronto Region Real Estate Board (TRREB) MLS.
A – Monthly Percentage Change in the Number of Units Sold
B – Month Over Month Average Price Percentage Change
C – Seasonally Adjusted Month Over Month Average Price Percentage Change
D – Monthly Percentage Change in Average Sale Price