Phew! I don’t know about you, but September felt like a marathon. With back to school, crazy traffic again and, of course, puppy training. Queue the Covid Puppy.
Heading into the Fall real estate market, conditions are the tightest they have been as new listings in August were 43% below historic norms, which lead to a larger summer slowdown compared to last year. In reality, market conditions began tightening up as early as last April/May with fewer new listings on the market. In industry terms, a tight market simply means fewer listings to meet buyer demand. We’re stuck at approximately 1 month of inventory which inevitably creates upwards pressure on prices. September sales were brisk and was the 3rd highest on record and the average selling price was up year-over-year and month-over-month. It also stands to reason that sales volume would have reached even new heights had there been more new listings to meet demand.
Generally speaking, most sales happen between March and June every year, but last year was an exception with much of the sales activity happening during January through June and then right through summer. The pandemic generated so much movement in real estate, mainly from people seeking more space either within Toronto or extending into suburban and rural areas.
We’re trending at 10% growth annually, when looking at a 20 year trendline, but we’ve been at 19% over the past couple of years alone, which is astronomical. If the past two years had kept up with the typical trend line, the average home price would be $900,000. The current average selling price is $1,090,000. With that said, analysts predict a slower rate of appreciation through late 2022 as mortgage rates steadily increase. Home price growth will eventually fall in line with the historical average, but not anytime soon.
Another interesting piece of data was that the debt-to-income ratios have risen to record highs. However, equality, if not more important, is the debt-to-asset ratio has dropped to its lowest levels since the 1990’s as homeowners have the highest amount of equity in their homes. This is due to historically low interest rates and more money going toward principal on top of the value growth in appreciation.
All this to say, if you’re thinking of selling, now is a great time.
I am always available to answer your real estate questions and I look forward to hearing from you!
And remember when life moves you, we’ll be there.