The Combination for the Toronto Market
You might think that this is a good set of numbers for the Quarterback in a football game, but what about the Quarterback in a real estate transaction?
This may be all the market information that you really need to know. This is the “key” source to the real estate cycle. This is the “combination” to unlock the cycle
We looked at the usual patterns of sales and prices in the Toronto and Greater Toronto real estate markets over a selected 9 years period.
· The market peaks twice every year (9 times out of 9)
· The peaks are Spring and Fall (9 times out of 9)
· The Spring peak is also the calendar peak (7 times out of 9)
· The market usually peaks in May (5 times out of 9)
· The market dips in the Summer (9 times out of 9)
· The trough is usually August (8 times out of 9)
· The market peaks again in October (8 times out of 9)
So, let’s assume the market starts off each year and rises to its peak in May. Let’s call that 100. That’s the high water mark or 100%. Then, the market dips down anywhere from 3.97% to 8.48%. The average is 6.95%, which we can round to 7%. Then, we have a resurgence to the end of October, anywhere from 92.45% to 104.85%. The average is 98.96%, or 99%.
Here’s the formula:
If you don’t like minus numbers, or lucky #7, then you could re-express the formula as 100-93-99. But, that would mean that you were “superstitious”.
What does all this mean?
Generally, the market is moving upwards at the annualized rate of 6.2%. Try to catch the cycle in the Spring. But, if you miss it, you may still get another chance. Don’t wait forever, because the market is going back up again. By October, 99% of the value has been recovered. This affirmation or reconfirmation of value simply sets the stage for another market increase, this time beginning in November. And, I know, you thought that nothing ever happened in November!
If you are the Quarterback, just remember:
100 ~ 7 ~ 99
Brian Madigan LL.B., Broker