I’ve been working in the Toronto real estate market for nearly two decades, and the market, the industry, and real estate in general have been called many things.

But if there’s one word that’s never been used to describe the market, it would be this one: boring.

I was writing my eNewsletter on Tuesday morning, trying to find the words to describe this fall market.  It’s sleepy, it’s quiet, it’s flat, and it’s calm.  It’s stable, it’s consistent, and it’s been somewhat uneventful.

And while the market here in Toronto has hit a point of stability, that’s noteworthy if for no other reason than the incessant talk of market collapses, recessions, and the world ending, it still feels almost unnatural.

Simply put: we’ve grown accustomed to mania in the Toronto real estate market!

Newspaper headlines about bidding wars, stories about unscrupulous buyers and agents and their misdeeds, and photos of sad would-be buyers in the newspapers!  Even when the market was coming off its peak in the spring, and prices were dropping, we still lapped it up like a thirsty dog on a hot day.

But this fall, the market has seemed almost boring by comparison.

And that’s why, among other reasons, I think we’ve spent so much time looking for real estate conversations and disagreements elsewhere, ie. the Build More Homes Faster Act, among other things.

Who cares about a flat real estate market?  That’s not sexy!

If a house isn’t getting 35 offers and selling for 170% of the list price, or re-selling in August for $1,600,000 after the buyer who paid $1,900,000 in February refused to close, it seems as though people just aren’t interested.

I’m not saying that the Build More Homes Faster Act isn’t something to be debated, but I do feel as though people are looking for enticing, dramatic, and controversial real estate topics elsewhere since the market just isn’t providing it.

Sensationalism sells!

It’s why some media outlets are still peddling mania even if it doesn’t exist.

I’m sure the photographers and food critics (who for some reason write about real estate…) at some online Toronto publications are sitting around right now choosing between the words “plummeting” or “crashing” to report on the local real estate market.  If the market isn’t crashing 30% per month, then it’s just not newsworthy enough!

And all the while, I have stop and ask myself this question: where are we going?

More importantly, where do want to go?

There are people out there that want to see the market go up.  Then there are those hoping that it will go down.

Many people are just hoping the market remains flat because that, they believe, is best for the economy, society, and our sanity.

So where are we going?

And how will we know when we get there?

Are we looking for prices to rebound?  Are we looking for listings to increase?  Do we want to see a certain sales threshold, and if so, what will we conclude?

I honestly think we’ve grown so accustomed to a market that is manic, that we don’t know what to make of a market that’s seemingly boring by comparison.

Let’s look at the last five months of the Toronto average home price:

Stable, right?

And yet………..boring.

There’s nothing sexy about it, and that’s why I feel many people are taking the conversation in completely different directions.

Some are suggesting that the market is going to rebound and snap back up next year, when there’s really nothing to support this.

Others are talking about a market crash, which, according to the data above, hasn’t happened and likely won’t.

But stability isn’t interesting.  So how about predictability then?

In this space last month, I wrote:

Any home price over $1,080,000 would still point to that “stability,” in my opinion.  And while that only allows for a 0.86% decline, it’s not out of the question.

See you here in a month’s time to find out how smart we all are…

Well, gee.  I was off by $605.

On the one hand, predicting the average sale price within one-twentieth of a percent is pretty impressive!

On the other hand, surely one could look at the data from July to October and make an educated guess, right?

But what does it say about the Toronto market that the average home price remains within a 1.37% range in the last five months?

Stability.

And boredom…

The year-over-year figures show some pretty wild stats.

For example, Active Listings in November were up 95.7% over the same period in 2021.  That’s a huge figure, but does it have meaning?

If we want to know what the market is doing right now, and use this as some indication of what to expect in the next 3-4 months, it’s comparing monthly data that matters, in my humble opinion.

Take Sales, for example.

We saw an 8.4% drop in sales from October to November, from 4,961 to 4,544.

What does that mean?

Well, on the one hand, since sales are down dramatically from the 9,017 in November of 2021, we could sound the alarm, call BlogTO, and tell them that the market is going to drop 70%.

Or, if we looked at what happens historically from October to November, we’d find this:

In nineteen of the previous twenty years, the number of sales in the GTA has declined from October to November.

And the average from 2002 through 2021 is 12.8%, so that 8.4% decline last month seems like a good indicator for the health of the market.

It’s hard not to seem, or even feel biased here, given I’m choosing to look at month-over-month data rather than year-over-year.

But looking at 4,544 sales this past month compared to 9,017 sales in November of 2021 doesn’t say what’s going on in our market right now.  It seems to say what’s happened over the previous eight months.

Now where did the decline in sales take place?

Let’s look at each of the major five regions:

Considering the average decline in the GTA was 8.4%, and that the twenty-year rolling average was 12.8%, these figures still aren’t out of line with expectations.

So here’s the question: should we expect that a decline in sales automatically corresponds with a decline in price?

I might.

And in the end, I would be wrong…

While York Region heads both lists, that’s the only consistent point there.  And it’s not even that consistent with prevailing opinions on the relationship between sales and prices, since a 2.6% decline in sales somehow led to a 4.1% increase in average sale price.

But what does it say about, Peel Region, for example, that a 17.1% drop in sales resulted in a 0.3% increase in average home price?

It tells me that there’s just no correlation here.

Part of my exercise every month in this blog feature is to look for patterns, correlations, and other indicators, and this month, I just don’t see a whole lot of that.

The only thing I had yet to examine at this point was the absorption rate, since perhaps a decrease in sales, offset by a further decrease in new listings, could lead to an increase in price.

Let’s look at the SNLR for each Region from January through November:

In theory, anything less than a 50% SNLR would signal a buyers’ market, and vice versa.

Last month, we saw the SNLR increase, hence a “tightening” market in Halton, Toronto, York, and Durham, with Peel remaining the same.

We all know that the market has changed since Jan/Feb/March, but if we look at the late-spring and early-summer through the current data, there’s a bit of a trend.

A “trough” seemed to take place in April/May/June with SNLR figures in the 30%’s, which we are so unaccustomed to seeing.

A 63% SNLR in Durham in August is the outlier to the data here, but for the most part, it looks like the market became balanced again in August, before dipping slightly in the early-fall, and returning to balanced once more.

Look at Toronto: 39%, 40%, and 42% in the late-spring and early summer, up to 50% in August, down again to 39% in September, and then trending back up through October and November.

This data supports what most of us are “feeling” out there in the market.

It also supports that flat, stable pricing that we’ve seen in the GTA overall through the last five months.

This might be the benefit of hindsight speaking, but it feels as though the damage in the market was done months ago, and now we’re in a holding pattern.

As I said at the onset: are we there yet?

And more importantly, where is “there?”

When the market is ripping, we simply hold on and accept the ride.  I didn’t say enjoy the ride, since many don’t, especially disenfranchised buyers.  But we accept the ride for what it is, as we’re just so used to a hot market as the norm.

When the market is trailing, we’re far more curious, cautious, and inquisitive.  We ask more questions, and perhaps that’s natural.  It feels as though we’re all on this ride, hanging on, looking left, right, up, down, and trying to figure out where we’re going and when.

But what happens when we get there?

And again, where is “there?”

Is it back to a seller’s market, which feels so normal?

Is it back to the sales figures in line with 2021?

Or is it merely about price?  Must we return to an average home price in the GTA of $1.33M before we comfortably exhale?

Perhaps it’s not about absolute price, and it’s more about relative price.

Maybe people will feel more comfortable on this ride if the average home price increases 3.5% from December to January, then 2.9% from January to February, and an average of 1.0% per month for the next four months.

How weird is that?

It seems to jive with the saying, “Better the devil you know than the devil you don’t.”

For now, the conversations will continue to be about what’s going to happen down the line, rather than what’s happening in the market right now, since this market is boring us all to tears.

But let’s not lose sight of how healthy a 5-6 month run of flat pricing is for this market, even if it makes for unspectacular media coverage and office water-cooler talk.

I expect the month of December to be the slowest yet.  We could see 3,500 sales, a decline to an average price of $1,050,000 (remember, you can’t take a December price as any indication of where the market is), and new listings could drop to 6,000.

Having just sold a condo tonight – in between writing the start and ending of this blog post, I can tell you that buyers are still active out there.  It’s just a different process and you have to find a willing buyer and a sensible, rational, professional agent on the other end.

We’re nearing the end of 2022 here on TRB, so next week, I’ll be offering up my regular year-end posts: “Top Five Real Estate Stories Of 2022” and “Top Five Blog Posts Of 2022.”

I’m open to suggestions for both!