TorontoRealtyBlog

Get out your tinfoil hat, folks, and place it firmly on your head!

Close the curtains because the neighbours are all spies.

Let’s talk about who killed JFK, who’s responsible for 9/11, and who put the caramel in the Caramilk bar.

And while we’re at it, let me regale you with a little conspiracy theory I’ve got running…

The monthly release of “TRREB Market Watch” isn’t quite as celebrated in Realtor-circles as, say, Christmas in your household, but for many of us, it comes close.  We never know exaclty when the stats will be released, but it’s usually around the 4th, 5th, or 6th of the month.

And it has to be, right?  To publish a statistical analysis of last month, you’d need a day or two after the month has concluded.  But more importantly, you’d want to leave a few days for the late-comers to report their sales.  Just because something sells on August 31st doesn’t mean that the listing brokerage is going to update MLS that very day.  It can take a day, or two, or three, or more for those lesser-than brokerages to get current.  And what of conditional sales from August that firm up a few days into September?

On average, I’d say that the TRREB Market Watch is released around the 5th of the month.

This year, with the 3rd and 4th falling on Saturday and Sunday respectively, and the 5th being Labour Day, I figured we’d see the TRREB stats on Tuesday, September 6th.  Maybe even Wednesday, September 7th, if things are really busy over there.

But what day did I absolutely not expect the stats to be released?

September 1st

It makes absolutely no sense to me, and as long as I’ve been tracking and writing about TRREB stats, which is probably fifteen years, I have never seen the stats released on the first of the month.

Forget about the statistical inconsistencies, the incomplete data, and the unreported sales, just for a moment, and ask yourselves: why?

Why did TRREB absolutely rush to get these stats out, in a way that they’ve seemingly never released stats before?

There are two reasons, in my mind, and one is positive and one is negative:

1) TRREB saw that sales were up almost 15% from July to August and therefore rushed to get the news out!

2) TRREB wanted to get the news out before the long weekend so it was buried in a busy news cycle and therefore not talked about the following week.

Is your cup half-empty, or half-full?

I suppose we’d have to dig through the data first to see if these stats are good or bad.  That’s open to interpretation, of course, and I could honestly make an argument either way.  At first, I thought that the improved sales figures were something that TRREB wanted to rush to the news cycle, but then when I re-ran the sales from August 1st – August 31st through MLS and found almost 5,900 sales, compared to the 5,627 that TRREB reported, it made me wonder, “Why wouldn’t they wait for better news?”

So maybe they did want this buried in the pre-weekend news cycle?

Who could say!

So let me provide my take and perhaps we can then debate whether the August figures point to a healthier market that’s on the rebound, a slow market on the decline, or a balanced market that shows little sign of turning one way or the other.

First and foremost: average home price increased last month.

Yes, it’s true.  For the first time since February, we saw the average home price in the GTA increase on a month-over-month basis.

A modest 0.4%, which is essentially a rounding error, but considering the declines in the preceding months, this is quite significant.

Here’s the average home price in the GTA each month this year and the corresponding increase/decrease:

For those of you who frequent this blog, you probably feel like you know these numbers off by heart.  I certainly feel that way.

And for those that figured we were in a downward spiral, or at least a downtrend, I would ask this: does the increase in August change your mind?

The bears will argue that a 0.4% increase is barely an increase, so there’s no reason to think the September figures won’t drop further.

The bulls will argue that to see 5.5% and 6.2% drops followed by an increase, any increase, is a sign that the market has bottomed out.

I would ask this: what normally happens from July to August?

You know how I think!  If we see an increase every year, then this is less important.

Here’s all the data from 2002 onward:

So in 16 of 21 years, the average home price decreases from July to August.

But in the two years prior to this past month, we saw the figure increase.

You might be tempted to go with the recency bias, but considering the insane downward pressure on prices – a 5.5% drop in June and a 6.2% drop in July, this 0.4% increase is of tremendous significance in my honest opinion.

I also mentioned that sales were up, month-over-month, from July, which is also significant considering they’ve declined every month since March.

That’s five months of decline in prices, and four months of decline in sales, for those playing along.

So is a 14.6% increase in sales, month-over-month, anything to celebrate?

Maybe.  It’s a definite maybe.

As I noted above, I’d want to see what sales “usually” do on a month-over-month basis, July to August, in order to gage the market.

So let’s have that, please:

Here we can see that in twenty previous years, only four times have sales increased from July to August.

And the increase last month was substantial at 14.6%.

Accuse me of trying to make an argument here, if you want to.  I assure you that’s not my intent.

If we look at the year-over-year sales figures, January through August, we can also see a trend:

Sales have been down, across the board, from what was an absolute record year in 2021.

But when the market began to slow in March, we saw the decline increase to 30%, year-over-year, then hang out ‘around’ 40% in April, May, and June, before showing us a dastardly 47.7% decline in July.

So while sales were down in August by 34.5%, year-over-year, the trend seems to be reversing.

Then again, if you want some evidence to the contrary, consider that when I wrote my “May Stats” blog, I showed you that the 7,283 sales in May were the lowest ever, save for 2020 when sales were crushed due to the pandemic.  Then June and July saw the lowest ever, period.

So what of August?

It’s hard to see that trend and claim the market is turning around, right?

Look, I go where the stats take me.  You can make numbers say anything you want and all that, but I’m genuinely looking at these figures trying to spot trends.

Can you tell me you see something different?

Take the sales-to-new-listings ratio as a metric as well.

As sales slow, new listings remain the same or slow at a lower rate, and inventory builds, we see the market shift into “buyers” territory.

An SNLR less than 50% is uncommon in Toronto and points toward a slowing market.

An SNLR below 40% is absolutely unheard of.

And yet, in May, we saw an SNLR of 39%, which was 7,283 sales up against a whopping 18,679 new listings.

So how does the SNLR in August look?

Well, it looks like yet another reversal of a trend.

39%, 40%, 41%

That’s May, June, and July, and definitely felt like we were heading into buyers’ market territory.

But with a 53% SNLR in August, and with a busy September ahead, I have to wonder if the tide is turning.

One of three things is happening:

1) We’ve hit market bottom, the tide has turned, and the August stats show a rebounding market.

2) We are in the midst of a medium-term downtrend and August is an outlier.

3) August is a classic “dead cat bounce” that provides further evidence that the market is going to decline in the fall.

The timing of a 0.75% interest hike yesterday is going to help arguments #2 and #3.

But how do you ignore the preceding data?

Also, listings have been slow so far.

This is my MLS home page as of Wednesday night:

When the market is in “peak” season, I’m used to seeing 120 new listings downtown, not 53.

I’m used to seeing 30 new listings in C9/10/11, not 15.

And the east side?  Only 11?  That’s typically 35-40.

If listings are slower than anticipated this fall, and sales are simply in line with expectations, this won’t be a buyer’s market.

But that’s just my opinion.

I’m happy to hear yours…

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