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February, 2019

Toronto Real Estate Market Update – January 2019

2019 started positively, surprising many who were anticipating the double-digit declines that the Toronto and area residential resale marketplace delivered in November and December of last year. Although moderate, January delivered increased sales volume and average sale prices compared to January 2018.

There were 4,009 sales reported in January, a less than 1 percent increase compared to 2018, but an increase nonetheless. Encouragingly, January’s positive results were due to an improvement in Toronto’s 905 region. The Greater Toronto Area was dramatically impacted by the provincial foreign buyers’ tax and has lagged behind the Toronto 416 market since the spring of 2017. In January, the 905 region’s sales were up by 2.5 percent compared to last year, while the City of Toronto’s sales declined by 3.5 percent. The decline in City of Toronto sales was not caused by a decline in demand. Rather the decline was driven by a chronic shortage of supply. At the end of January, the Greater Toronto Area had 2.7 months of inventory, whereas the City of Toronto found itself with only 1.9 months of inventory. The difference in inventory is also reflected by the fact that sales in the 905 region took place in 33 days (an average), yet it took only 29 days for all properties in the City of Toronto to sell.

Another positive aspect of January’s performance is the supply of new properties that came to market. In January, 9,456 new properties became available to buyers. This is a favourable 10.5 percent increase compared to the 8,561 new listings that became available last year. Entering February, active listings were slightly higher than last year. February began with 11,962 active listings compared to the 11,894 available last year. The bulk of these listings are located in the 905 region. OF the 11,962 active listings, 8,387, or more than 70 percent, are located in the 905 region.

January’s average sale price came in at $748,328, an increase of almost 2 percent compared to last year’s average sale price of $735,874. This is exactly the kind of increase that reflects a stable and sound market, not the double-digit monthly increases that became commonplace in 2016 and early 2017. Double-digit increases in average sale prices become unsustainable and unfortunately can lead to painful corrections.

In this regard, Toronto’s high-end residential market continues to adjust. In January, 76 properties having a sale price of $2 million or more were reported sold. This compared to 90 reported sold during the same period last year. The adjustment is also evident in the sale price to listing ratio witnessed in January. Detached properties in Toronto’s central districts are the most expensive properties in the Greater Toronto Area. All detached properties in these districts sold for 95 percent of their asking price. This ratio was much lower than the detached properties in other trading districts. For example, all detached properties in Toronto’s eastern districts sold for 100 percent of their asking price. The fact that the average sale price in the eastern districts is half ($916,588) that of the central districts ($1,938,617) is no doubt responsible for this divergence. Higher-end properties accelerated more dramatically during the pre-2017 introduction of the Ontario Fair Housing Plan and are retracting proportionally, especially with the introduction of the 15 percent foreign buyers’ tax.

Condominium apartments continue to be the most affordable housing form, but again, because of supply, average prices continue to increase. In January, the average sale price in the City of Toronto increased by almost 9 percent to $591,444. In Toronto’s central districts, where most condominium apartment sales are located, the average sale price came in at $677,997, a 10 percent increase compared to last year’s prices. In January, there were only 1,738 condominium apartments for sale in the City of Toronto and only 1,093 in Toronto’s central districts where most sales take place. This shortage of supply will continue to put upward pressure on prices, constrained only by affordability.

Although it is a little early in the year to be forecasting for 2019, January’s results – sales volumes, price increases and increases in supply – all point to a healthy 2019. Last year only 77,375 residential properties were reported sold, the lowest number since the recession of 2008. Barring any unexpected economic events this year, we should see between 83,000 and 85,000 reported sales, with average sale prices increasing by about 2-3 percent. January’s average sale price came in at $748,328. Last year’s annual average sale price was $787,000. By year-end, Toronto and area’s average sale price should be approximately $800,000. From a long-term sustainability prospect, we should be thrilled with this number.

Collingwood Real Estate Market Update – January 2019

January 2019 market conditions in the Western Region of Southern Georgian Bay reflected the more moderate and balanced pace experienced throughout the last portion of 2018 compared to what Buyers and Sellers had experienced over the past few years. Looking back, the Fair Housing Plan was introduced by the Ontario government in April of 2017 to quiet the market frenzy that began in 2016. New mortgage rules were introduced in 2018 that required all Canadian home buyers to undergo a mortgage stress test, even with a down payment of 20% or more. These measures were intended to cool overheated markets and curb risky lending. Many Buyers have been faced with difficulties qualifying for loans under the stress test that ensures Buyers could still afford their mortgage if interest rates were two percentage points higher than the rate they negotiated with their bank.

It’s not surprising that with interest rate hikes implemented in 2018 along with government measures and ongoing supply issues that the number of sales in the Western Region of Southern Georgian Bay in January 2019 were down 16.5% from one year ago.

With the ongoing scarcity of listings and continued demand driving prices upward, the average sale price in the Western Region reported a 29.7% increase from last January, reflecting similar activity reported across the region where the average sale price was up in all areas except Meaford, which reported a modest decline of 3.3%.

New listings were up 13% year over year and even though active listings were up 29.8% to 471 in January 2019, inventory remained at near historic lows.

The Sales-to-New-Listings Ratio indicates the ratio between the number of homes sold and the number of new listings entering the market. With the Sales-to-New-Listings Ratio down from 60.9% last January to 45%, the Western Region is clearly heading out of a long-running Seller’s market into a balanced market. A higher ratio implies a Seller’s market, while a lower ratio implies a Buyer’s market.

With interest rates unlikely to climb significantly in 2019, affordable housing options and strong demand for the vibrant lifestyle offered in the area, the Western Region is poised to perform well throughout the coming year.

PEC Real Estate Market Update – January 2019

You would think that with the January we just had, complete with bone-chilling temperatures, mountains of snow, and treacherous roads, that most right minded people would stay safely cocooned in their homes, taking shelter from the elements, and waiting for some sign of a break in the frigid weather before venturing forth and thinking about real estate. According to the Quinte and District Association of REALTORS®, (“the Quinte Board”) however, that does not appear to be the case in Prince Edward County (“the County”). Rather, despite the fact that the County was particularly buffeted by winter storms, and a Polar Vortex that would not quit, the property was listed and sold in impressive numbers, highlighting once again what a robust market the County is, and how well positioned it is moving into 2019 to sustain steady and stable growth.

Specifically, 34 properties sold in January across the wards that comprise the County. That is just shy of 80% more sales that occurred last year when only 19 properties changed hands in January. Sales did not appear to be restricted to any one demographic or price group but rather reflected the diversity of both the market as well as buyers interested in investing in the County. This appears to be consistent with market trends and forecasts which give secondary markets the edge in performance for 2019 given their comparative affordability advantage (compounded by the challenge of higher debt loads, interest rates and the stress test), and the fact buyers are able to be more creative inflexible in their chosen domiciles be they primary, recreational or something in between with the advent of technology and more flexible working and living arrangements.

Due in part to a somewhat calmer market overall, inventory is up with 395 properties available for sale at month’s end compared to only 243 one year ago, but the number of new listings was down by almost 20% with 87 properties coming onto the market compared with 108 in January 2018. Accordingly, at this pace, it is likely that the market will tighten up even further unless there is a sudden increase in the number of properties coming onto the market.

Prices year over year, given the particular cross-section of sales recorded for January came in virtually on par with last year’s numbers, just under $400,000 ($397,734) compared to just over that threshold last year when it was recorded at $405,711, marking a negligible decline of under 2%. Interestingly, and consistent with these figures, the median price for properties selling in January in the County came in identical to last year with both being calculated at $365,000.

Potentially with a few more properties on the market and a slightly less frenetic pace which gave buyers more of a chance to consider their options and arrange for acceptable financing where appropriate, or potentially for no other reason than it was harder to get to properties while hurdling snow banks or contending with the bitter cold, the properties that did sell took on average 10% longer to sell, enduring 86 days on the market over the holiday and afterwards, as compared to 78 days on average the year previous.

Generally speaking, commentators are calling for a calmer, steadier year with consistent but more rational activity now that both buyers and sellers have had the opportunity to adjust to conditions that are less frantic than the roller coaster they have been riding over the last couple of years. The dominant challenge for the real estate market will continue to be affordability with buyers struggling with the challenge of balancing debt with higher carrying costs due to increasing interest rates and the effects of the stress test. As mentioned, however, the County is well placed to take advantage of steady demand and the desirable profile that it continues to enjoy, and the fact that the spotlight for 2019 continues to focus on secondary real estate markets as the top performers to watch.