With daylight savings time taking place last Sunday and darkness setting in before 5:30pm, winter will soon be upon us. Toronto’s real estate market is feeling the chill with transactions dropping by 50% from a year ago. Inventory is tight providing some price support as affordability is made more difficult against a backdrop of rising interest rates.
While prices are down, the drop in sales volumes is more disquieting. Summer was expected to be quiet as inflation and interest rates increased. Any hopes that the fall market would see a rise in transactions has not happened.
The chart above shows that there were ~1,800 monthly average transactions from July to October 2022. Since 2012, Jul-Oct average monthly transactions dipped to ~2,400 in 2012 and peaked at ~3,500 in 2016 and 2020. The red line is the 10-year monthly average of ~2,900. This year’s ~1,800 monthly average transactions represent a decline of 37% from the 10-year average and 48% from its peak. These fewer transactions are attributable to the shift in market expectations.
At the beginning of 2022, homeowners looking to move were comfortable to buy first knowing that they could sell in a seller’s market. As interest rate increases took effect in Q2, homeowners became more cautious about buying before selling as buyers started to wait and see if prices dropped. The shift took hold by the beginning of Q3 as most homeowners would not buy until they sold their house. As a result, the market was in stalemate with homeowners holding the line on price since they don’t have urgency having not yet purchased a property yet. Meanwhile, buyers facing higher interest rates are being conservative with expectations that prices will drop further due to expected higher interest rates to come. As a result, 2H sales volumes are the lowest in more than a decade.
With another interest rate increase expected in December, in next month’s newsletter we will look at just how much affordability has been eroded with the higher interest rates. Until then, I expect the market to remain quiet.
Shen Shoots The Breeze
Many of you know that we are avid curlers. We picked up the sport about 16 years ago when we were both looking for a sport we could play together and continue doing into ‘old age’.
We realized that playing together was not ideal if we wanted a peaceful marriage – so Dave plays on a men’s team and Shen has her own women’s team at the East York Curling Club. We’ve had some curious questions throughout the years, so we thought we’d dispel some assumptions.
- What is curling? There are 2 teams on each sheet of ice made up of 4 players per team. Players send a 40ish-lb of granite (the rock) down a sheet of ice. The rocks follow a curl, ie, not straight pattern down the ice. Sweepers may be called to keep the rock from curling too much or to drag it further down the ice. The goal of the game is to get your rocks closest to the centre of the house (a big circle target on the ice).
- The ice is slippery but not as slippery as hockey arena ice. You can feel it is bumpy which is caused by water droplets freezing upon contact with the ice. This is called pebble and helps the rock curl.
- Curling looks easy. Is it even exercise? Curling requires balance and flexibility when delivering the rock. Depending on your position on the team, you can put on about 2 miles walking up and down the ice during the game; plus the sweeping motion involved in directing the rock can burn a lot of calories.
- Socializing and good sportsmanship is part of the game. More so than in many other team sports, good sportsmanship, often referred to as the “spirit of curling”, is an integral part of curling, which means teams congratulate their opponents for making a good shot, strong sweeping, or good form. Perhaps most importantly, the spirit of curling dictates that one never cheers mistakes, misses, or gaffes by one’s opponent, and one should not celebrate one’s own good shots during the game beyond modest acknowledgement of the shot such as a head nod, fist bump, or thumbs-up gesture. It is completely unacceptable to attempt to throw opposing players off their game by way of negative comment, distraction, or heckling (although sometimes we do in our minds). It is traditional and proper curling etiquette after most games for the winning team to buy the losing team a drink after the game.
- As in chess, conceding a game is part of the game. A team can concede a game before all ends are played if the losing team believes it has no hope to win. Concession is an honourable act and does not carry the stigma associated with quitting. To concede a match, members of the losing team offer congratulatory handshakes to the winning team.
- Curling is not that expensive to get started – you can use the same equipment for years before needing replace.
- If the Olympics is a dream, curling is one of those sports where genetics is not an essential factor. At the elite level, players come in all sizes and heights. In addition, Canada has the greatest number of curling clubs (1,000 clubs) compared to any other country (USA: 185; Sweden: 80). If you have dreams of seeing your child at the Olympics, consider signing them up for curling.