Posted on August 16, 2018 in Cabbagetown
Every summer we look back at the first 6 months of the year and crunch the numbers. January-June usually sets the tone for the year; we see the biggest increases in price and looking back over the past 5 years in Cabbagetown, 60% of the total sales for the year happen in the first half.
The start of this year is certainly different when compared to recent years. Remember that huge spike in prices last spring that made the news almost daily and caused the government to intervene with measures aimed to cool the overheating Toronto real estate market? Well those numbers from the first half of 2017 show just how high prices were jumping. At the peak it was a 35% year/year increase which was unsustainable. The numbers also show that the measures to cool the market worked, particularly for freehold homes.
In the first half of 2018 the prices for Cabbagetown homes have fluctuated starting out strong but the typical lively spring market here and across the City never really took off as expected.
What we find particularly interesting is the number of days on market which increased 144% over the first half of 2017 and the number of transactions decreased by nearly 27%. If we apply the average of 60% of total yearly sales occurring in the first half of the year, this would mean there will only be 63 sales in the neighbourhood this year, down 24% from last year.
The provincial election, interest rate increases and the new mortgage stress test introduced at the end of 2017 all have been cited as reasons for buyer reluctance. Pair that with how crazy it got in the first half of 2017, which is still clear in everyone’s memory, and it’s no wonder the numbers for the first half of 2018 are what they are.
What does all this mean heading into the fall market? Looking at the spring market that showed signs of its usual ramp-up then petered off when May hit (typically the busiest month) there could be a lot of buyers who hit the breaks earlier this year but are still considering a move. The condo market has remained extremely strong so buyers who are looking at selling their condo and moving into a house have had their investment grow by waiting and might be in a better position this fall to make a more.
Sellers in Cabbagetown might feel discouraged by these numbers and decide to wait until 2019 to sell. If the buyers return to the neighbourhood in earnest and there are few properties on the market, then basic supply and demand principles will mean the sales in the second half of 2018 should be good ones.
The prices in this first half are on par with the year end of average sale price for 2017. We don’t have a crystal ball, but we see 2018 finishing favourably but with smaller gains and fewer sales than years past.
Numbers and percentages above are specific to Cabbagetown.
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