Much like most of this summer, it’s been raining on the Mississauga real estate market. At least, it depends on who you listen to. We’ve all read the headlines and we’ve all seen the stats bandied about. But, how do we make sense of those numbers and how do we know what they mean?
Depending on the source, you’re going to get different types of numbers and headlines.
The media LOVES a good fear-mongering article and will feed on negative news like a hungry shark. This is why you’ll see the drop in the amount of sales as the leading headline.
On the other side of the aisle, you’re going to have those in the industry who will want to soften any negative news or play up any positives as much as possible to make it seem like nothing at all is amiss. You’ll generally hear them lead with the news that YoY (year-over-year) numbers are still way up from this point in 2016.
So, What’s Really Happening in the Mississauga Real Estate Market?
To begin, this article won’t have many references to statistics. I encourage you – the reader, homeowner, tenant, investor etc. – to do your own research for your own specific neighbourhood. If you can’t find access to the information, or don’t know how to go about accessing it please CONTACT ME and I will help you find it.
I’m going to attack this as someone that works in the industry every single day and across various segments of the market. I won’t soften numbers or tell you that everything looks rosy or the sky is falling. I’ll try to give you a real world, practical outlook as I seen it unfolding day to day.
TRUE or FALSE
Let’s take a look at a few statements you’ve probably heard on the news or talked about with friends in a bit more detail. At the very least, you have some talking points at your next dinner party or coffee break.
The number of sales is down a whopping 40% (or some variation of this)
True…but also False
True – Across the freehold (and condo townhome) segment the sales volume is down close to 40% from last year at this time. The most significant dropoff in sales volume has occurred since the Liberal government announced the housing changes.
False – Defying everyone’s predictions, the condo market has seen sales virtually unaffected and unchanged recording a minuscule increase of .6% YoY.
Prices are plummeting in the GTA after home sales drastically drop
True…but also False
True – Prices have fallen between 11%-13% across all segments (except condos) since the peak of the market in March/April.
False – Year over year, prices are up 13% across all segments (23.5% for condos). So, while we have seen a correction from the ridiculousness that was the first part of the 2017 market, we are still in double digit price increase territory compared to last year. For condos owners, the situation is even more positive as prices are down 6% from the peak in May, but 23.5% YoY and 13.4% since January 2017. The dip in July could easily be explained by a traditional sales cycle whereby prices are normally at their peak in May and lower in the summer months.
New listings are WAY up
True…but also False
True – New listings are UP 13%-20% across all segments (except condos). That’s a massive, double digit increase that is mostly attributable to the rush of sellers trying to cash in after the housing changes.
False – The condo market is again the outlier with listings increasing by only 4% YoY and an insignificant amount after the housing changes were announced.
We’re in a Buyer’s Market
False – We are currently not in a buyer’s market…yet. Sitting at around 1.4 months of inventory (how long it would take to sell all existing homes on the market) is still firmly in what’s considered a traditional seller’s market.
Traditional wisdom says that 0-4 months of inventory is a seller’s market, 4-6 is a balanced market, and 6+ is a buyer’s market.
The problem is we have completely forgotten the definition of a seller’s market. In the past few years, we’ve come to attribute a seller’s market to be one that only has multiple offers and homes selling in a weekend. We’ve become so used to that type of market that we celebrate being able to have conditions in an offer and question the liveability of any home on the market more than a week.
The truth is, we’re still not in a buyer’s market yet. The days of multiple offers have been over for a few months now, but we’re not completely out of the woods just yet. This return to some kind of sensibility should be celebrated by mostly everyone though.
We’re on our way to a massive price correction due to the bubble finally bursting
I wish I had a better answer than this for you, but the truth is that no one really knows at this point. Corrections can occur over the course of 2-3 years, but we’re starting at such a high point that we haven’t even begun to test the willpower of demand.
Prices are still 13% higher than this time last year and we don’t know at what point buyers finally say “ok, let’s get back in the market”. This run could continue through the Fall, with prices continuing to drop 5% month over month until we reach a point in the Spring where prices are LOWER than 2016.
If that’s the case, we may well be on our way to a more proper correction and balancing of the market. However, it’s far too early to tell as we’re simply seeing the effects that the announcements have made on the market. They certainly did cool the freehold segment, but this Fall and next Spring will be the true test of where we’re headed.
It’s also possible that the rush of listings we saw was simply homeowners looking to cash in. The numbers certainly spiked far, far more in May and June and the big dip from the peak of the numbers could easily have been those same owners taking as much as they could.
The other anecdotal thing I’ve noticed in the market is the quality of home that is selling. In previous months, you could virtually put any home on the market with almost no updates and would sell for a record amount. The house could have terrible marketing and photography and still sell with no conditions in a weekend.
Now, what I’m seeing is those properties sitting and not selling at all. However, have a well-priced home that’s updated and marketed and shown well? You’re still selling in under two weeks for close to asking price.
The stats have yet to bare themselves out, but we will have more answers in the Fall as to the willpower of buyer demand in the freehold market. Perhaps people will feel more comfortable back in a market where you can get a home inspection and a financing condition and things stabilize from here on out. That wouldn’t bring the market back down to a point where everyone could afford it, but realistically speaking, we’re likely very far gone from that point.
August is a traditionally slow month in real estate so I won’t take anything from the data, but let’s have a look at the end of September to see how things are shaping up.
In the meantime, if you have questions about your particular situation, please CONTACT ME.