February TRREB Stats: Boom Goes The Dynamite! – Toronto Realty Blog
Are you a baseball fan? Yes, no, maybe?
Surely, you’ve heard of Babe Ruth, right?
In 1921, Babe Ruth hit a whopping 59 home runs, which broke his own major league record.
Six years later, in 1927, the Babe broke that record by one, swatting 60 home runs. That record stood until 1961 when Roger Maris broke Babe’s record by one as well, hitting his 61st home run on the last day of the season.
And then in 1998, Mark McGwire took steroids and hit seventy home runs, while Roger Maris’ two sons watched from the stands and pretended to be happy…
Most records are records for one reason: because they were so unlikely to ever happen in the first place. So when records are broken, it’s usually in an incremental fashion.
Mark McGwire broke Roger Maris’ record not by one home run, or two. Not by three, or four, or five. He broke the record by nine, which, as a percentage, is almost 15%.
The Toronto real estate market in the month of February absolutely obliterated several very notable records, not the least of which is price.
On Wednesday, I wrote the number: $1,045,488 on a sticky-note and pasted it on my office wall. I’m not being dramatic here; I literally sat and drank my afternoon coffee and just stared at that number. It was so impossible to believe, and so impossible to make sense of. But then again, after the month we just had, maybe, just maybe, it made perfect sense after all.
In my February eNewsletter, I wrote the following:
By the time April comes around, we’ll see an average GTA sale price well in excess of $1,000,000.
That was my prediction, and I stood by it, even though it would have represented a monumental year-over-year increase.
But here we are, looking back at the February stats, not April, and not really seeing anything resembling that $1,000,000 figure, as $1,045,488 is in a different tier altogether.
February’s average sale price is to January’s what Mark McGwire’s home run record was to that of Roger Maris.
So then is March going to be Barry Bonds?
To put this $1,045,488 in perspective, let’s look back at the GTA average home price since the fall of 2019:
Recall that in that starting in September of 2019, prices were stagnant throughout that fall market. From $843K to $852K and back to $843K in a 3-month blitz that represents the busiest 3-month period in the real estate calendar, traditionally.
2020 was obviously slowed due to the pandemic, but once we learned to transact in this new world, prices rose steadily from June through the end of the year.
Back in the fall of 2020, I figured that we’d see the average home price cross the $1,000,000 threshold in 2021, but I didn’t know when.
Fast-forward to early-February of 2020, and with that $967,885 price recorded in January, I was predicting that we’d cross $1,000,000 by April.
Not only did we cross that mark in February, but we smashed through it. Obliterated it!
And that increase from January to February represents a massive 8.0% month-over-month increase.
So if you’re like me, you’re asking, “Have we seen 8%, month-over-month increases before? And if so, when?”
Great question! Although, I asked it…
Dating back to 2012, here are the top month-over-month increases in the GTA average home price:
The top twenty is a bit much. I think you get the picture after the first few.
But I wanted to show you the top twenty because February is in there nine times! And if you’ve done the math on this, there are ten February’s included in the data set. So what does that say about February?
There are 110 months included in this data set and February makes up nine of the top twenty.
It seems to me that an 8.0% increase from January to February is really nothing to get excited about, even though I was excited about it all of last week. I mean, this February increase actually trails February of 2020.
Despite all this, I still can’t quite grasp the $1,045,488 figure.
And when it comes to the 416, the increase is even crazier.
We went from a January average sale price of $866,331 to a February price of $995,201. That’s a whopping 14.9%.
Let’s repeat the same data set with the 416 average home price:
Interesting tidbit here: while the GTA’s average home price of $1,045,488 is a record, the 416’s average home price of $995,201, is not. The record 416 average home price was set in August of 2020 when the price hit $1,025,925. Try to make sense of that, if you will…
Now aside from price, the second most-notable statistic to come out of February’s TRREB stats are with respect to sales.
February saw a whopping 10,970 sales.
Crossing the 10,000 barrier isn’t rare, but it’s saved for the busiest months of the year.
In the 110 months tracked from January of 2012 onward, only 19 of those months saw more than 10,000 sales.
And until this past month, how many of those 19 were in the month of February?
Zero.
Here’s how sales in the month of February look:
The previous record was a mere 8,014.
The 9-year average before this past month was 6,412.
So how can we possibly put 10,970 in perspective?
I honestly don’t know. Perhaps even more so than the ridiculous average home price, I honestly don’t know how to make sense of almost 11,000 sales in a month when that’s 70% higher than the average in that month.
To be fair, January saw a record number of sales too. So we went from a record-January to a record-February, and thus we’re keeping up a pace that’s already been set.
So along those lines, instead of comparing February to past February’s, let’s compare how the January-to-February performance stacked up against previous years to try and track that “pace” in the market:
This almost shows that record February sales figure in a different light.
Although we saw a record in February, we also saw a record in January. So those 10,970 sales, albeit impressive, are completely in line with 2020 from the standpoint of an expected increase, month-over-month, since both years saw a 58% increase.
Obviously, the 28% and 27% figures from the two previous years point to torrid months of February in 2020 and 2021, but look at 2016, wow! Now that was a February to remember!
In the end, prices in our market are determined by supply and demand, so if the demand for houses and condos results in a whopping 10,970 sales in February, and prices rose dramatically, then that must mean that inventory dropped, right?
No, it didn’t.
It actually skyrocketed!
Here’s new listings for both January and February, so we can look at how February of 2021 compares to previous February’s, but also to see how the expected increase month-over-month compares to the actual increase in 2021:
A record number of new listings: 15,137.
And a record percentage increase from January too, at 60.5%. Not even close to any other month since the start of 2012.
If you had told me that:
a) Sales will increase by 58%, month-over-monthb) New listings will increase by 61%, month-over-month
I would not have expected an 8.0% increase, month-over-month.
Now, as for how the market is absorbing the inventory, aka the “Sales to New Listings Ratio” or SNLR, let’s compare February of 2021 to past February’s:
So we’re ahead of last year, but well behind the “crazy” 2017 market. That sounds about right.
SNLR stays pretty consistent in each month of the year, on a year-over-year basis.
Just look at this chart:
Relatively speaking, those peaks and valleys look quite similar, no?
My take-away from this month’s statistics is that both sales and new listings are up, almost in unison, and inventory remains very tight. But I marvel at the massive increase in prices as a result.
On paper, based on the supply and demand stats, I don’t think prices “should” have increased to that extent.
In practice, based on what I’m seeing in the market out there, I think prices could have increased even more.
I have so many stories to tell on TRB based on the last week’s experiences, it’s a shame I only post three times per week. 🙂
I’ll be back on Wednesday with another “Behind The Scenes” that I think everybody – buyers, sellers, buyer agents, and listing agents could learn from…
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