Rob's Real Estate Report
February 2023 Housing Stats & Analysis
By Rob Pilon: So, has the market bottomed, is still in free fall, moving sideways, on a temporary rebound before another correction, or now on a permanent incline? Accurately predicting future real estate trends in such volatile times is a fool's errand, but at the very least, we still need to examine market fundamentals. In this report, I explore average sold price movements over the last 2 years, and more recently.
FYI: TRREB stands for the Toronto Regional Real Estate Board and includes the sale of all residential property types in Toronto, Peel, Halton, York, Durham and other outlying areas. All property types means detached, semis, freehold and condo townhouses, and condo apartments. Commercial sales are not included. It goes without saying that these are average prices across a broad spectrum, therefore individual regions, municipalities, neighbourhoods and particular property types will vary. Nevertheless, a macro view of the greater market is important to spot trends and meaningful fluctuations in the stats. All excel tables were created by me using TRREB data.
Month Over Month Change in Average Sold Prices (all property types) Throughout Entire TRREB Area
Peak of the market
What's the first thing that pops out to you in the table above?
February 2023 sale prices jumped 5.5% from January to February of this year. Look through the table to see the last time we saw such a large M-o-M increase. The most recent was during the booming months of January and February 2022 when January 2022 prices spiked 7.3%, then soared another 7.4% in Feb 2022. Does that mean we can expect the same in coming months?
No. Look at similar M-o-M increases in March 2021 (went up 5% from the previous month) and Sept 2021 (went up 6.1% from the previous month). In both cases, subsequent months saw flat to slightly downward M-o-M numbers.
One month does not make a trend, but historically, it's the first major uptick since the market began correcting downwards after Feb 2022's peak (look at the M-o-M numbers from March 2022 to January 2023). In doing so, you probably also noticed the blood-letting from March 2022 to July 2022. Prices fell 2.6% from Feb to March, then fell 3.5% from March to April, then fell 3.3% from April to May, then a painful drop of 5.5% from May to June followed by one of the worst month over month declines of 6.2% from June to July.
In 7 short months, from January 2022 to July 2022, enormous volatility hit the real estate market. Let's break it down. Jan & Feb combined saw prices increase a whopping 14.7% (that would be an excellent increase over a 1 year period, never mind in just 2 months), then in the 5 following months, prices fell a dramatic 19.5% from Feb to July, wiping out the 14.7% gain in Jan & Feb, to a arrive at a net loss of 6.4% in the first 7 months of 2022 by the end of July.
Think about it. TRREB property prices fell 19.5% in just 5 months. What came next was interesting. Look at the month over month data for the 6 months after that, from Aug 2022 to Jan 2023. Prices increased marginally in Aug, Sept and Oct, then fell slightly more in Nov, Dec and Jan (which is not uncommon when seasonally adjusted, especially for Dec & Jan). So prices fell a huge 19.5% in 5 months, followed by another fall in prices of only 3.4% over the next 6 months doing the math from Aug 2022 to Jan 2023. It's worth repeating. 19.5% crash in 5 months, followed by a far less significant 3.4% decline over the next 6 months, ending Jan 2023. Then, a sizable month over month increase in prices of 5.5% last month. If you add up all the slight gains and slight losses each month over the subsequent 7 months following the 5 month 19.5% crash that ended in July 2022, we see a net gain in prices of 2.1% from Aug 2022 to Feb 2023, thanks to the 5.5% gain in Feb 2023.
5 months brought 19.5% of price declines, followed by 7 months that resulted in a net 2.1% price appreciation. This provides more than anecdotal evidence that the market has bottomed in spite of dramatic mortgage rate increases, persistant inflation and ridiculous media reporting that compared Feb 2023's average price of $1,095,617 to the peak of the market in Feb 2022 when prices reached $1,334,544. Comparing year over year figures, Feb 2023 saw prices fall by 17.9% from Feb 2022. To make an informed decision on whether to buy, sell or hold, you need to know what the market's been doing between that time.
One last observation on average sold prices. Look at the average prices from July 2022 to last month, Feb 2023. They all fall in the $1,0xx,xxx range. In other words, all were under 1.1M and over 1M. Now look through the table to see when these kinds of prices were duplicated. In pretty much the first half of 2021. That's where today's prices are.
Ok, let's see how Peel, Halton, York, Durham and Toronto fared compared to the entire TRREB area:
Month Over Month Change in Average Sold Prices in Major Regions (all property types)
The table above shows real estate prices peaked in February 2022 in all regions (green text along top row). The bottom row that begins "From Feb's Peak" indicates the percent that prices dropped from Feb 2022's peak to Feb 2023. Let's start there. The far right blue column represents the entirety of TRREB's area coverage which includes and goes beyond the regions in this table. The average sold price for all of TRREB fell 17.9% from the peak in Feb 2022 to Feb 2023.
Which regions did better or worse than that?
The City of Toronto, which includes Toronto West, Toronto Central and Toronto East, did better. As of Feb 2023, Toronto prices dropped only 11.5% from the peak. The greatest price collapse occured in Durham where prices plummeted from $1,228,990 in Feb 2022 to only $888,448 in Feb 2023. That's a 27.7% descent. Halton wasn't far behind with a 26.4% decline from the peak. In fact Peel, Halton, York and Durham had greater price losses from their peak when compared to the entire TRREB area. Sustained buyer demand for Toronto properties is evident. Toronto's peak price in Feb 2022 was only $1,210,889. That's lower than the peak price of all other individual regions, especially York where prices peaked at $1,587,603 in Feb 2022. Hence Toronto's price adjustment was less pronounced when the bottom fell out of the market.
If you recall from the previous table, all TRREB areas saw the average sold price of all property types increase 5.5% from Jan 2023 to Feb 2023. That's also reflected in the above table near the bottom blue column. Take a look at the month over month price change from the same Jan 2023 to Feb 2023 time period in all regions. How many regions experienced more than a 5.5% M-o-M increase? Only Toronto. Toronto's prices jumped 8.4% from $987,842 in Jan 2023 to $1,071,043 in Feb 2023. This after 3 previous months of prices falling at least 3% each month in Toronto. That represents a noticable positive adjustment in the market. Time will tell if this is a harbinger of things to come, or only a one month anomoly.
The region that saw the next best price gain from Jan 2023 to Feb 2023 was Peel. Coming in at a gain of 3.9%, Peel's rebound was more pronounced than York's 1.3% increase and Halton's 0.3% increase. Durham experienced the lowest M-o-M price gain of only 0.2%, adding no relief to Durham's price crash of 27.7% from the peak. Unfortunately, with respect, Durham has always been the runt of the suburban litter. It enjoyed a massive price surge during the pandemic because it had the cheapest properties of all suburbs. As prices rose during the pandemic and high-income earners transitioned to work-at-home, many buyers flooded the burbs for larger homes and bigger backyards, and Durham had the most attractive prices. But when prices fell, Durham's inferior commercial (white-collar employment base), amenity infrastructure, and distance and transportation issues were not sufficient to sustain high home prices. It's no secret that the most significant commercial and residential development projects in the GTA happens north and west of Toronto.
Finally, let's examine what the market did collectively in late summer, fall and early winter in each region.
We'll add up all the M-o-M percentage changes for each region from Aug 2022 to Feb 2023 inclusive (this is more relevant to what prices have been doing in the recent past), and it evens out the volatile month-over-month swings in each region during these months:
Take a moment to absorb these numbers.
Although prices tanked in all regions from Feb 2022's peak one year ago (see right column), prices also inched higher in some regions recently. From Aug 2022 to Feb 2023 (left column), average sold prices fell 9.5% in Halton, fell 3.4% in Durham and fell 2.8% in Peel. However in the same perid, York's prices increased by 3.1%, while Toronto prices went up a notable 4.2% since Aug 2022.
Many agents who work in Toronto and York Region attest to more showings on listed homes, more multiple Offers when properties are intentionally listed below market value, a greater number of properties selling at or over the asking price, and less days on market to get them sold. These events are also happening in Peel. However not every home in Toronto, York and Peel receive a warm buyer's welcome. Many properties still languish on the market. The fundamentals of selling are vital now, like being in a desirable neighbourhood, having sought-after upgrades and features, and listing your home very close to market value or intentionally under-listing to generate multiple Offers.