Although the sales results for residential resales reported by the Toronto Real Estate Board were down in June as compared to June of 2011, the month’s performance was still strong. As in the case of the previous few months, the number of new listings coming to market continued to increase, prompting some economists to conclude that the sellers’ market that has been in play in Toronto since the latter part of 2009 may be coming to an end. I believe that this prediction maybe premature. It will take a string of months when sales decline and listings continue to increase before the market will convincingly move from a sellers’ to a balanced market.
In June 9,422 residential properties were reported sold. This request is down by more than 13 percent compared to the 10,850 sales reported in May, the most sales reported in any month in 2011. June’s sales were also off by 5.4 percent compared to the 9,959 sales reported in June 2011. This is one of the few months in which sales in the current month did not exceed sales for the same month in the previous year. On a year-to-date basis, 50,778 sales have been reported. This pace, if it continues, will exceed the record year of 2007 when Toronto area Realtors sold 93,193 residential properties.
A trend reported in the last monthly report continued into June. Sales growth continues in the 905 region, while sales are beginning to decline in the 416 marketplace. In June sales of detached houses were down 9 percent in the 416 area, yet up 2 percent in 905. Similarly semi-detached home sales were down 15 percent in the 416 region, while the corresponding housing type in the 905 region was up 7 percent. It is only in the case of condominium apartment sales that the 905 and 416 markets are in lock step. Condominium apartment sales were down 18 percent in the 416 region and 20 percent in the 905 area, the largest drag on the over market.
New listings continued to increase as compared to June of last year. 16,679 new listings came to market, 13 percent more than the 14,755 that came to market last June, but substantially fewer than the 19,177 that came to market in May. Since April 52,292 new listings have come to market. During this same period 30,400 sales have been reported, resulting in an increasing active listing base. At the beginning of July there were 20,583 active listings, 13.7 percent more than the 18,102 properties available for sale in July of 2011. As I have indicated in previous reports, the increasing inventory, if it continues, will shift the balance in the market, resulting in more buyer choice and ultimately moderating price increases.
Not withstanding the increasing inventory levels of residential properties in the Toronto area properties continue to sell at a very brisk pace. In June it took only 22 days for all properties (on average) coming to market to sell. Last year it took 24 days. Although the pace in June was blistering, it was one day less than the 21 days it took all properties to sell in May. Like the months of inventory, the days on market statistics must be keenly observed to see if any moderating patterns are developing.
June’s average sale price declined as compared to Mays. In May the average sale price was $516,350, slightly less than the all time record average sale price of $516,608 established in April of this year. Junes average sale price came in at $508,622, 7.3 percent higher that the $474,223 achieved in June 2011. Junes decline, as compared to April And May, is consistent with cyclical seasonal declines, and does not, therefore indicate that average sale prices are declining. Historically prices begin to decline in June, and continued to decline in July and August.
Central Toronto remains the most expensive place to purchase detached and semi-detached houses. On average a buyer can expect to pay $1,306,000 for a detached house, and $ 700,000 for a semi-detached house. Properties in these categories sold in 19 and 14 days, respectively, notwithstanding their expensive selling prices. The least expensive detached and semi-detached homes can be found in Toronto’s eastern trading districts. On average homes sold for $ 506,370. Buyer’s had to be ready to act quickly. Properties in these categories were often spending less than 10 days on the market before being reported sold.
July will be an interesting month to monitor. If at the end of the months sales for July of this year are less than sales for July 2011, it will be two consecutive months of negative sales variances. Still too early to pronounce that the market has shifted to a balanced market. But clear signs that change is underway If this does not occur, then one can anticipate a brisk market for the remainder of 2012, though less frothy than the first six months of this year. Early indications are that July 2012 will compare well to the performance achieved in July 2011.
Prepared by: Chris Kapches, Senior Vice-President
Chestnut Park Real Estate Ltd., Brokerage
