Reality of fall condo market

Sales figures will challenge commonly held perceptions

With all the gloomy headlines this fall declaring a declining Toronto condo market, one has to wonder: What’s really been happening out there?

An insider’s look at the monthly sales activity yields insights that may challenge some commonly held perceptions.

Take new condo sales in October, for example. Were they way down or just average? It all depends on your perspective.

There were 1,914 new condos sold in October. While that’s 38 per cent lower than the total sales in October of last year, remember that 2011 was a record year.

Over the long term, there has been an average of 1,821 new condos sold during October. So if you compare this October to the average October, new condo sales were actually 5 per cent higher than the average.

This interpretation of market activity doesn’t lend itself to sensationalistic headlines quite like the perception that sales have dropped off by 38 per cent.

For added perspective, consider sales statistics on a year-to-date basis.

Year-to-date, by October 31, there were 16,564 condos sold in the GTA. If you compare these sales figures to year-to-date 2011 — which was a record-breaking year — sales volumes in 2012 are down 30 per cent.

But if you compare those sales statistics to average year-to-date new condo sales, 2012 comes in as the fourth best year on record.

The takeaway: If you compare results from this year to those of a record year — 2011 — you may tend to think the current condo market is heading on a downward trajectory.

But a well-informed and balanced interpretation of the 2012 condo market must take into account long-term average sales figures.

Let’s start by looking at average monthly sales.

September sales on average have been 23 per cent higher than August sales. So if you compare September 2012 with August 2012, it was actually 43 per cent higher than the average.

October sales are on average 12 per cent higher than September sales. If you compare October 2012 with September 2012, it was in fact 79 per cent higher than the average. Comparing 2012 fall condo market sales to last year’s record results will inevitably lead you to a negative perception of where the market is headed. But if you compare this year’s fall market to the average results over the long term, it’s clear that the market is in fact gathering momentum at an aboveaverage rate. What about November? While it’s too early to tell officially, it appears the same trend is taking shape. November 2011 was a very strong month, with 3,855 condo sales. Average sales for November over the long term are 1,690.

A wise market watcher should always consider the long-term view

So, while average sales in the month of November decline by 7 per cent from October, based on confirmed sales at the time of writing, the probable sales outcome for November 2012 will likely be above average. Was 2012 a good fall market or a good market fall? It all depends on the perspective you choose to take. But a wise market watcher should always take into account the longterm view. George Carras is the president of RealNet Canada Inc. His column appears in New in Homes & Condos the last Saturday of every month. For more information, visit realnet.ca or follow on Twitter at @realnet_canada.