Friday, August 25, 2017

Sales Bubble? Average GTA Prices and Sales volumes can seem confusing - I'll try and remove some of the confusion

I just received a question from a reader and thought I would share the question and my answer to you.

The question was:

Hello Mark,

I  was able to observe  some variances the monthly price statics in your website and other data sources as noted below.  Since you're a professional Engineer I am confident that you have much stronger quantitative skills than most realtors and was wondering if you could help me to reconcile some real estate pricing data? 

I am specifically referring to the the Oakville Milton and York Region pricing data.   



Regards,

G.

Hello G

Thank you for your email.

The Huffington Post article you are referring to below flips back and forth talking about volume of sales and sales prices.  Then at the end of the article they quote that prices are still up comparing July 2016 to July 2017 by 5.1%   I can see how this can seem confusing.

The chart they show are actual selling prices in the two areas, York and Oakville Milton.  The article states that the graphs are 'Residential Sales" and I'm assuming they are showing "only" detached home prices, not the overall average residential (which would include condos townhomes etc. I say this because I don't believe the average of ALL residential in Oakville and Milton in the spring was ever about $2.3Million.    Seems high for the 'average'  Regardless, I would say that the graphs are likely very accurate. 

You could write the author and ask where the data came from and what the actual data is showing.

You can see my graph of the data here:


It is similar to the data shown in the article.

My graph also shows a drop in the overall TREB average single family residential price from approximately $916k in March 2017 to $746k in July 2017 – a giant overall drop in average price.  This coincides with the seasonal summer slowdown period, so it's not quite as dramatic as you many think.  On the other hand, it's only the second time since January of 1995 that summer prices have dropped below the previous fall average prices – this signals a significant change in the marketplace.

It's not all doom and gloom, but it shows how quickly the market can turn.  We've seen this before in 1988/1989 and again in 2008/2009 - this could be a short blip in the market or a trend, only time will tell!

I hope this helps a little.

Please let me know if you have other questions

Thank you,
Mark

Wednesday, July 12, 2017

Bank of Canada increases by 1/4% to 3/4 per cent July 12 2017

Greetings from fabulous Mississauga!

As expected the Bank of Canada increased the prime rate by .25% (1/4%) this morning.

It will be interesting to see if the banks increase their lending rate and to what amount. 

Read part of the press release below and entire press release link at bottom

All the best!
Mark



Bank of Canada increases overnight rate target to 3/4 per cent

FOR IMMEDIATE RELEASE

12 July 2017

The Bank of Canada is raising its target for the overnight rate to 3/4 per cent. The Bank Rate is correspondingly 1 per cent and the deposit rate is 1/2 per cent. Recent data have bolstered the Bank’s confidence in its outlook for above-potential growth and the absorption of excess capacity in the economy. The Bank acknowledges recent softness in inflation but judges this to be temporary. Recognizing the lag between monetary policy actions and future inflation, Governing Council considers it appropriate to raise its overnight rate target at this time.
The global economy continues to strengthen and growth is broadening across countries and regions. The US economy was tepid in the first quarter of 2017 but is now growing at a solid pace, underpinned by a robust labour market and stronger investment. Above-potential growth is becoming more widespread in the euro area. However, elevated geopolitical uncertainty still clouds the global outlook, particularly for trade and investment. Meanwhile, world oil prices have softened as markets work toward a new supply/demand balance.
Canada’s economy has been robust, fuelled by household spending. As a result, a significant amount of economic slack has been absorbed. The very strong growth of the first quarter is expected to moderate over the balance of the year, but remain above potential. Growth is broadening across industries and regions and therefore becoming more sustainable. As the adjustment to lower oil prices is largely complete, both the goods and services sectors are expanding. Household spending will likely remain solid in the months ahead, supported by rising employment and wages, but its pace is expected to slow over the projection horizon.  At the same time, exports should make an increasing contribution to GDP growth. Business investment should also add to growth, a view supported by the most recent Business Outlook Survey. 

Read the full release here:



I hope this finds you Happy and Healthy!
All the Best!
Mark
A. Mark Argentino
P. Eng. Broker
Specializing in Residential & Investment Real Estate

RE/MAX Realty Specialists Inc.
Providing Full-Time Professional Real Estate Services since 1987

BUS 905-828-3434
FAX 905-828-2829  CELL 416-520-1577
mark@mississauga4sale.com

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