Muskoka Real Estate Market Update – Spring 2014

For the second year in a row the recreational market has been negatively impacted by weather conditions. Winter has been long and hard, not only making access to cottage properties almost impossible, but creating an atmosphere not condusive to buying a recreational property. Cottages are associated with warm, sunny days, welcoming lakes, and motor and sail boats on the horizon. With snow drifts often taller than cottages, and frigid temperatures, those summer visions evaporated. There may not have been the high water issues that we experienced last year, but conditions were sufficiently challenging to keep sellers from considering listing their properties for sale.

The decline in inventory in the first four months of 2014 is quite striking, a pattern that might be a reflection of broader market trends. During the first third of the year the Muskoka Haliburton Association of Realtors reported processing 3,097 properties for sale. This compared to 3,235 properties for sale during the same period in 2013 and 3,664 in 2012, declines of 4.3 and 15 percent respectively. This pattern repeated for recreational properties.

In the Haliburton region inventory of recreational properties has declined from 295 available properties in 2012, to 236 in 2013 and down to only 173 this year. These declines amount to 26 percent since 2013 and 41 percent since 2012. The declines on Lake of Bays are similar but not as dramatic. There were 109 recreational properties available for sale in 2012, 100 in 2013, and 92 this year, declines of 8.2 percent and 15.6 percent. The situation on the Muskoka Lakes, Lake Rosseau, Lake Joseph, and Lake Muskoka is not dissimilar. There were 243 active available listing of recreational properties in 2012, 232 last year and only 200 this year, declines of 4.5 and 17.7 percent. The Association reported only 760 recreational properties for all Association trading districts combined, down from 1,025 in 2012 and 867 last year. The decline from 2012 is more than 25 percent.

Anecdotally these declines can be explained by the severe weather conditions experienced in 2013 and this year. But this explanation sheds no light on why inventory levels have decreased so dramatically from last year, when weather conditions were equally as inhospitable as they were during the first four months of this year. It may be too early to tell, but demographics may be playing a role in these statistics. As the population ages and becomes more settled there may be fewer potential sellers. It will be interesting to see how this data unfolds during the remainder of the year.

Sold recreational properties have also declined since 2012. Weather conditions have clearly had an impact on the number of properties sold. In the Haliburton area sales have declined from 35 to 28 in 2012 and 2013 to 25 in the first four months of this year. On Lake of Bays from 20 to 15 to 10. The only recreational trading district to reverse this trend is the Muskoka Lakes. In 2012 there were 25 reported sales. Last year reported sales dropped to 18, but this year, notwithstanding the weather conditions, sales have increased to 23, an increase of 27 percent. It is not surprising that with fewer properties available for sale, and inhospitable weather conditions, that sales have declined.

Because of the divergent nature of cottage properties, prices are affected by such features as location (a particular lake), exposure, elevation, water depths and boat traffic. As a result determining average sale price trends becomes more challenging than in an urban environment where numerous sales of comparable properties allow for a fairly accurate reflection of current market values. Moreover sales take place at a much more rapid pace. For example in the Toronto housing market, in April average days on a market for all properties sold were only 20 days. A review of sales that took place in March as reported by the Association indicated that median prices have declined by approximately 8 percent compared to March 2013. As I have indicated in previous reports, a market analysis of the first four months of recreation property sales is not productive since the market is normally dormant during this period. However what this early data indicates is that caution should be exercised in pricing. Sellers must be mindful that the recreational market is not the robust Toronto resale market, where multiple bids on properties are common. Recreational properties will sell, and they will do so quickly, if priced realistically.

Toronto Real Estate Market Update – April 2014

The Toronto residential resale market continued a string of strong monthly performances in April, a trend that defines the spring market: low inventories, strong sales and rising average sale prices. Mortgage interest rates remain king. Historically low with no likelihood of an increase for the remainder of this year. As this market update was being prepared Laurentian Bank was offering a three year rate of just under 2 per cent, the lowest mortgage rate ever offered in Canadian history.

In April 9,706 residential resale properties were purchased, many by buyers eager to take advantage of the exceptional low rates. This compares with 9,535 sold last year, an increase of 1.8 per cent. The number of properties sold would have been much higher had there been more properties available for buyers to purchase. Most of the sales were in Toronto’s 905 region. In fact 60 per cent of all sales were in the 905 region, with only 3,544 in the actual City of Toronto. There are two obvious reasons for this trend. Property values are less in the 905 region, and buyers only pay one land transfer tax. With the average sale price steadily rising, the additional land transfer tax charged by the City of Toronto adds many thousands of dollars to the purchase of a home. A misguided tax that should be reconsidered.

In April the average sale price for all residential properties sold in the greater Toronto area came in at $577,898, the highest average monthly sale price ever recorded. In the City of Toronto the average sale price was more than 10 per cent higher at $641,666.00. Average sale prices for detached and semi-detached properties in Toronto also reached record levels. The average sale price for detached homes increased by 13.2 percent in April (as compared to last year) and the average price of semi-detached homes sky rocketed by 18 percent. Detached homes in Toronto now sell for $965,670 and semi-detached homes sell for $702,332. The most expensive neighborhoods for buying a home are in Toronto’s central district. The average price of a detached home in Toronto’s central districts comes in at an eye-popping $1,506,782. Semi-detached properties were not far behind at $942,267.

April’s average sale prices not only produced record numbers but they did so in record breaking speed. All properties in Toronto and the 905 region sold in only 20 days on average. Last year it took 23 days for all properties to sell. Within various neighborhoods the speed of sales was even faster. For example, in Toronto’s eastern region all detached homes sold in a remarkable 10 days. Not only were sales fast, but all on average sold for 104 per cent of their asking price. Although not as quickly, but still remarkable, all detached homes in the central district sold in 17 days, and for 100 per cent of their list price. It must be reiterated that the average sale price of these homes was $1,506,782.

Condominium apartments remain the most accessible housing type for Toronto buyers. In the City of Toronto alone 1,505 condominium apartments were sold in April, 3.2 percent more than last April. Prices, however, did not reflect what is occurring with detached and semi-detached housing sales. The average price of condominium apartments rose moderately by 1.8 percent to $384,758, still an affordable housing alternative, and probably the only choice available to first time buyers. More than 63 percent of all condominium apartment sales took place in Toronto’s central neighborhoods, predominately downtown.

April saw a considerable spike in high end property sales, properties having a sale price in excess of $1 Million. These amounted to more than 8 percent of the total sales for the month of April. 828 sales were reported in this category. Last year there were only 606, a 36 percent increase. More surprisingly were the number of properties sold achieving a sale price of more than $2 Million. 135 of these properties traded hands in April. Last April only 98 properties in this price range found new buyers, a year-over-year increase of almost 38 percent.

One of the factors driving this robust market is inventory levels. The greater Toronto area reported only 2.5 months of inventory. Some trading areas were in even greater need of new listings. Toronto’s eastern, and still less expensive districts, reported only 1.7 months of inventory. The number of new listings coming to market is not encouraging.

In April 17,351 new properties came to market, 4.5 percent less than in April 2013 (18,160). As we enter May, there are only 19,118 properties available for buyers to consider as compared to 20,866 last year at this time, 8.4 percent less choice. This is a difficult market for buyers. Limited choice, and competition for what is available. There is nothing that points to a change to this environment anytime soon.

Toronto Real Estate Market Update – March 2014

There were few surprises in the residential resale data that emerged for March sales in the greater Toronto area. The trend continues. Low inventories of available property’s are driving sales and average sale prices, fueled by historically low mortgage interest rates. Rates might even get lower before they start to rise. At the end of March the Bank of Montreal made available a five year mortgage with an interest rate of only at 2.99 percent. Since mortgage interest returns are the banks’ primary source of revenue, increasing competition amongst banks, and no doubt lower rates over the short term, can be anticipated. This is no doubt good news for Sellers who find themselves with multiple bidders for their properties, all hoping to purchase a property before mortgage interest rates begin to rise.

In March 8,081 residential properties traded hands, an increase of more than 7 percent compared to 7,537 sales reported in March 2013. The bulk of these sales took place in the 905 region. Of the 8,081 reported sales, 5,103 took place in Halton, Peel, York, Durham, Dufferin and Simcoe County, This is not surprising considering that consumers have more choice in the 905 region, and prices remain lower than comparable properties, if you can find them, in the City of Toronto. Although the gap is declining, the average price for a detached house is $254,000 less in the 905 region –and the buyer pays only one land transfer tax- than in the city of Toronto. Semi-detached homes are $222,000 less expensive.

As has been reiterated in many of the last Market Reports, inventories remain a problem. At the end of March there were only 16,543 available properties in the greater Toronto area for buyers to choose, 10 percent fewer than the 18,384 available at the end of March 2013. A positive turn in March was the number of new listings that came to market. This March 14, 829 new properties were listed by realtors in the greater Toronto area. Although only 1.4 percent higher than the 14,618 that came to market in 2013, it represents the first year over year increase that the market has witnessed in a number of months. One month does not create a trend, but it may be that sellers sitting on the metaphorical real estate fence are coming to market in order to capitalize on the surging average resale prices.

In March the average resale price came in at $557,684, a record for Toronto, surpassing the previous record for a single month achieved only last month. February’s average sale price came in at $552,885. March’s average sale price was almost 8 percent higher than the average sale price achieved in March 2013. Increases were consistent across all housing types. Detached homes in Toronto increased by 6.8 percent, semi- detached by 8.7 percent, townhouses by 7.7 percent , and condominium apartments by 5.1 percent.

Central Toronto remains the most expensive place to live in the greater Toronto area. The average price of a detached home in March exceeded $1,400,000. Semi –detached homes are equally expensive, averaging more than $800,000 for a typical semi. The least expensive area to live in Toronto is now the west end. The average price of properties came in at $587,980, $21,000 less than east end properties. East end properties however remain the hottest real estate commodity in Toronto. All east end properties sold in only 10 days, with most of these sales taking place in Riverdale, Leslieville, and the Beaches. Not only did these properties sell quickly, but on average they sold for 109 percent of their asking price. This is an unprecedented pace for sales. The overall market, including the 905 region saw all properties sold in a startling 21 days, 3 days faster than sales took place in 2013.

Condominium apartment sales continue to lag as compared to free-hold sales, although the pace of sales in that market sector is also accelerating. In February condominium apartment sales took 34 days to sell. This pace was consistent with the pace of sales over the last year. In March all condominium apartment sales were achieved in a mere 29 days, the first time that the 30 day barrier has been broken. Given the fact that inventories in this sector are not increasing dramatically, it can be anticipated that over the short term condominiums apartment sales will continue to accelerate. In March 2,941 new condominium apartment listings came to market. Last March 2,850 new listing became available. Heading into April 4325 listings will be available for sale, only 5 more than in April 2013. It is interesting to note that condominium apartment sales now represents 45 percent of all sales that take place in the city of Toronto.

Looking forward April should, subject to available inventories, total close to 10,000 property sales. Last April the Toronto Real Estate Bard reported 9,535 sales. There are many buyers attempting to take advantage of five year interest rates that are less than 3 percent, and lenders are eagerly attempting to loan them money. However, with average sales prices beginning to move towards $600,000, an increase in mortgage interest rates maybe the trigger that will slow sales. Since there is no indication of a rate increase, there is no apparent end to the Seller’s market place we have been experiencing since the spring of 2013.

Collingwood Real Estate Market Update – April 2014

The numbers released by the Southern Georgian Bay Association of REALTORS® (SGBAR) for the Georgian Triangle real estate market for the month of April reveal several interesting trends which, at least on their face, are not entirely consistent. The first is that the market has not entirely recovered from the brutal winter that we have just endured, resulting in a potential lag to the spring selling season which often experiences a surge of activity at this time of year accompanying the thaw. As discussed in earlier reports, the area has been plagued by a shortage of inventory which is only just starting to correct itself. That, mixed with the delayed spring, has contributed to fewer properties changing hands. The interesting twist to this scenario is that it does not appear to have affected the higher end market which, potentially due to increasingly positive economic reports, is actually churning out a sterling performance, significantly outperforming the rest of the market and counter balancing the reduction in overall unit sales.

While consistent with sales trends established so far this year, April’s numbers continue to trail those from last year, however, the trajectory appears to be in a positive direction with the negative year over year differential diminishing. More specifically, 196 properties were sold in April compared to 211 in the same month last year, marking a 7% decrease in unit sales. Year to date figures remain 11% behind last year with a total of 549 properties changing hands compared to 617 last year by this time. As indicated, however, higher end sales are more robust with the declines being, for the most part, reserved to properties priced below $350,000. In fact sales increased in all price categories above that threshold with the single exception of those in the $700-799,999 in which 3 properties sold as compared to 4 in April, 2013. As a result, despite the fact that unit sales were down by 7% this April, total dollar volume was actually up by 7% year over year, though year to date numbers still trailed by 2%.

As indicated, a scarcity of listings appears to have had a depressive effect upon sales, but this may be resolving itself and pointing to an improvement in conditions for the remainder of the quarter. New listings increased somewhat over last year with 720 properties coming onto the market compared to 706 last April, a 2% rise. Year to date listings, however, remain 8% behind last year with only 2085 new listings so far as compared to 2267 in 2013. Inventory therefore continues to be tight, with SGBAR reporting 2133 active listings at the time it published its figures, almost 6% fewer than last year when the Board reported 2226 active listings at this time. That said, this number is still a significant improvement over March when month end figures for active listings dipped below 1900.

Prices continue to rise, with the year to date average residential sale price coming in at $357,662, a 7.7% increase over last year’s average price at this time of $332,046. The upward trajectory in prices appears to be getting steeper with year over year average prices for the month of April coming in a full 10% ahead of last year for residential single family properties ($350,705 compared to $318,817). This will be something to watch, however, spread over a twelve month period, the year over year increase is still less than 5%, ($340,173 compared to $325,109).

Now that spring appears to be finally upon us, the hope is that choice will improve with more properties coming onto the market. As mentioned, most economic indicators continue to be positive, and bolstered by extremely competitive lending conditions and ongoing affordability in the region despite recent price increases, the fundamental ingredients appear to be in place for a solid performance by the Georgian Triangle real estate market moving into the next quarter and as the season heats up.