Prices down 2% in Toronto. Time to panic?
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Hey there, condo investors. This article is from BuzzBuzzHome, and the headline is, 7 stats that show Toronto’s November surge in home sales. So, breaking down some of the numbers from the month of November, we have the stats for the month of November. The big headline that most media outlets picked up on was the fact that prices overall in the GTA were down about 2% from this time last year. It’s the first time since 2009, apparently, that the actual average sale price, the benchmark price, of all the homes traded actually went down, year over year.
Now, the other big piece here is the continuing story that while houses are struggling, condos, on the other hand, are continuing to do very, very well. Prices are still appreciating in double digits. This time, they’re up about 16%, which sounds really high. Historically, it is very high, but it’s actually down quite a bit from the 20, 25, 30% that we have been seeing in the past year for condos.
So, the main takeaway I wanna get, other than the fact that condos are doing well, and detached houses are struggling, is just the fact that you’re gonna see more of these headlines moving forward of prices overall being down. This is not cause for alarm. What we’re heading into now, seasonally, is a period where the year before was insanely high, and the current year, now, that we’re in, is more of a normal market. So, you’re gonna see prices down 5, 10, 15% perhaps, maybe even as much as 20%. But that doesn’t mean that the market is dropping or anything like that. It just means that we’re coming off an extremely unusual, crazy high that was the first four, five months of 2017. And as we start to compare our stats to those crazy record-high, unbelievably record-breaking months, the numbers are gonna look dramatically lower, but it doesn’t mean that we’re in any kind of a market crash or anything like that.
As investors, we need to learn to look beyond just the stats, the numbers on the page, and see what’s really happening there. Joe Public out there is gonna see those numbers. It’s gonna cause some fear with some people perhaps. Some people are gonna say, “Oh, the sky is falling. Everything’s going down.” But come around May, June, July of 2018, when those numbers start to turn around, and the prices … the average prices start to go back up again, year over year, the strategic investors who are understanding the trends here are gonna be already in place, already taking advantage of opportunities in the market. And it’s the Joe Public who’s gonna be jumping back in at that point. And that’s obviously not a strategic way to act, and that’s how we need to think about it and how we need to approach it as condo investors.