in a continuation of the pattern seen in September, October demand for County properties continued to exceed the supply of listings. The reason is simple: a lot of people want to move from Toronto to the County, but people in the County like it here and have no reason move.
Sales Up Over 100%
Re-sales fell significantly in October compared to September, but this should obscure the fact that sales were way ahead of last October – up 103% to be exact. The scarcity of listings may be restraining sales.
Listings Continue to Plummet
Although existing home sales were down compared to September, the number of homes actively listed for sale fell even further.
It seems clear that homeowners are reluctant to list their houses, even with prices up significantly from a year earlier. By and large, the homeowners who wanted to sell…have sold already.
Inventory 12% Compared to Last Year
With the number of listings falling faster than the number of sales, the months of inventory fell again in October. In practical terms, the months of inventory for existing homes in October was just 12% of what it was last year.
Homes Snapped Up
With the “shelves nearly bare” in September and October, buyers realized that they had to move almost right away in order to snag a desirable home and the percentage of homes sold in a week or less grew dramatically. it should come as no surprise that buyers are having trouble finding their idea house and many are forced to compromise to find anything at all.
Selling Price vs. Listing Price
With such limited inventory, you’d expect an increase in the percentage of homes selling for list price or more. However, that’s not what occured in September and October when sales at or over listing price fell compared to August.
So what happened? The explanation is simple. By the start of fall, sellers were becoming increasing aware of how hot the market was and increased their prices significantly.
Average Price Increases Even Faster
The average selling price for exiting homes continued to increase during the summer. The average price for exiting homes sold this October was up a staggering 40% compared to last year.
Even using the 3-month average price for August, September and October to iron out any bumps, the average price was up 29% from last ye
With demand and supply so far out of whack, something has got to give and what’s giving are prices.
If things keep going as they are, prices are likely to continue to increase rapidly until the County becomes so expensive that buyers in large numbers start to go elsewhere.
However, things may not keep going as they are and there are many developments which could put a halt to the extreme sellers’ market in the County right now:
- The Canadian economy could decline again as the second wave builds.
- The boom in Toronto which is fueling our could run out of steam.
- Another shutdown more prolonged shutdown in short-term rentals could force many investors to sell at the same time.
“The bigger the party, the bigger the hangover.” If County real estate continues on its present course, you may want to consider stocking up on Alka-Seltzer or whatever your favorite remedy is.
A note on methodology: This report specifically concerns existing home sales and excludes new construction. The market behaviour is different for each of these types of homes and combining them together clouds what’s happening in the market. First, many buyers coming to the County are not looking for a new home in a sub-division. Including listings in sub-divisions makes it appear that the selection is better than it really is. Second, most listings for new construction represent the promise of a home to be built sometime in the future, and not a home that can close in the near term. Finally, buyers of new homes pay the full asking price with no negotiation over the base price, while re-sale homes can sell below or above listing price – combining existing homes and new homes together masks price trends for existing home sales. New homes represent an important and growing part of home sales in the County but need to be analyzed separately to avoid misleading conclusions.