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.

Muskoka Real Estate Market Update – Year End 2018

It became obvious as 2018 wound down that the recreational market place was not immune to what was happening on the broader economic front. Throughout 2018 borrowers in the Toronto and area market place were reluctantly pulling in their horns, forced to do so by rising interest rates and borrowing costs, mortgage stress testing, and a 15 percent foreign buyers tax. By the end of the year Toronto and area sales had (on a year-over-year basis) declined by approximately 15 percent and average sale prices were off by more than 4 percent. It is anticipated that 2019 will be a year of sluggish sales and some moderation in average sale prices, particularly for higher priced homes. The same market scenario will likely play out in recreational property markets as well.

Interestingly sales volumes will to some extent by impacted by declining inventory levels. For example, in 2018, 1110 waterfront properties came to market in the combined Townships of Muskoka lakes, Bracebridge, Gravenhurst, Lake of Bays and Huntsville, almost a 10 percent decline from the 1224 properties that became available in these regions in 2017. It is even more concerning when 2018 inventory levels are compared to 2016 and 2015. During these years 1419 and 1594 recreational properties respectively came to market. Between 2015 and 2018 inventory levels have decreased by more than 30 percent.

On Muskoka’s big Lakes (Lakes Joseph, Rosseau and Muskoka) the same pattern has emerged. In 2015 there were 515 properties listed for sale on the big Lakes. This year that number tumbled to 332, a decline of over 35 percent. The same is true for Lake of Bays and the big Huntsville Lakes, although that decline has not been as dramatic.

Its not surprising that with declining inventories, sales have also declined. Combined in the Township of Muskoka Lakes, Bracebridge, Gravenhurst, Lake of Bays and Huntsville there were 684 recreational properties reported sold in 2017. In 2018 that number dropped to 565, a decline of more than 17 percent.

There was a similar decline in sales on Muskoka’s big Lakes. In 2017 there were 220 recreational properties reported sold, a number that declined to 165 in 2018. This represents a 25 percent drop in sales, which is consistent with the decline in inventory over the same period. On the basis of percentages, the decline in sales of properties having a sale price of $3,000,000 or more was greater than properties having sale prices lower than that.

It is interesting to note that not only were there few higher priced properties that sold in 2018, but it took longer for these properties to sell in 2018. In 2018 all properties in this category sold in 66 days. In 2017, which was a record year for the market, all recreation properties sold in only 59 days. Between 2014 and 2016, recreational properties in this price point sold, on average, in 73 days. Days on market in 2018, therefore, were consistent with historical norms. Although days on market increased between 2017 and 2018, there was no difference in the ratio between sale price and list price. In both 2017 and 2018 all properties sold at 95 percent of their original sale price.

The Muskoka and area recreational market place is varied and not homogeneous. As a result, it is difficult to determine what happened to average sale prices in 2018 with any accuracy, especially given the categories of properties that have sold and the numerous recreational locations. But evidence indicates that the average sale price for properties reported sold on Lakes Muskoka, Rosseau and Lake Joseph declined by 6.5 percent, from $2,211, 372 in 2017 to $2,069, 142 in 2018. If we include sales of properties (over $500,000) in the Lakes of Bays and Huntsville region, the decline in the average sale price is approximately 7.5 percent, from $1,994,810 in 2017 to $1, 843, 627. Interestingly, sales data of all recreational properties combined, which includes lower priced properties, indicates a substantial increase in the average sale price year-over-year. In 2017 the average sale price was $450,000, in 2018 the average sale price climbed to $650,000, an eye-opening increase of 38 percent.

What does all this market information tell us? It appears to be giving us the same signals that the market is projecting in the greater Toronto area. Lower priced properties are very much in demand and when available are selling briskly, putting upward pressure on prices. The urban equivalent would be condominium apartments. In the greater Toronto area average sale prices for condominium apartments increased by 11 percent. They are in demand primarily because they are affordable, even with the market pressures of increased borrowing costs and mortgage stress testing.

Under the prevailing economic landscape, the upper end of the market in the greater Toronto area has seen a considerable pull back, both in terms of sales volumes and average prices. The most recent data indicates a considerable decline in the sale of properties having a sale price of $2 million or more. In 2017, 3,435 properties were reported sold in this category. In 2018 only 2077 properties sold at this price point, a decline of almost 40 percent.  Average sale prices for this category of properties declined by 8%. Although property sales in recreational markets in this price point are discretional to a greater degree than urban markets, they will not be entirely immune to these market pressures.

Notwithstanding these turbulent conditions, Chestnut Park’s Port Carling office managed to beat market expectations by exceeding the next closest competitor brokerage office by more than 50 percent in dollar volume sales. Chestnut Park’s sales representatives were responsible for more than $250 Million in recreational property sales. Given the lack of inventory and the market pressures that have been discussed in this Report, this is a sterling performance.

As we go forward into 2019 the market challenges that have been discussed will continue to be at play. Next year will be a transitional year when less foreign capital, increased borrowing costs and stricter financing qualifications will impact the decision making of buyers and sellers. Added to these factors is the lack of inventory and supply in all price points, but especially properties having a value of less than $1.5 Million. As the year unfolds pricing will be the key to sales in the new normal that buyers and sellers of recreational properties will be adjusting to.

Toronto Real Estate Market Update – Year End 2018

There were no surprises in December. The year came to an end as expected. Higher borrowing costs and the new stress testing measures implemented at the beginning of the year are now a driving force in the Toronto housing landscape. The landscape is now one of moderating sales volumes and average sale prices, as was made evident in December’s resale data.

In December sales declined by more than 22 percent compared to last year. Last December 4,876 properties were reported sold by Toronto and area realtors. This year that number shrank to 3,781, the lowest number of December sales since the 2008 recession. December’s sales brought total sales for 2018 to 77,426, a decline of 16 percent from the 92,000 plus sales recorded in 2017, and more than 30 percent fewer than the 113,000 sales reported in 2016. In 2016 mortgage interest rates were half of what they are today, and borrowers did not have to qualify subject to rigid stress testing rules.

In December the average sale price for all properties reported sold in the greater Toronto area held up well, coming in at $750,180, 2.1 percent higher than the $734,847 average sale price achieved last December. On an annualized basis, however, Toronto’s average sale price declined by slightly more than 4 percent, from $822,000 last year to $787,000 in 2018.

The decline in overall average sale prices was driven primarily by the decline in sales and sale prices for Toronto and area’s more expensive properties. In December only 82 properties having a sale price of $2 Million or more were reported. Last December 116 were reported sold. In December 2016, 140 properties were reported sold in this price category. On a year-to-date basis, 2,077 $2 Million plus properties were reported sold. In 2017, 3,435 properties in this price category changed hands, an eye-popping 40 percent decline. It should be noted that the bulk of these sales took place in the first 4 months of the year before the Ontario Fair Housing Plan and increased interest rates took effect.

Notwithstanding these negative figures, the landscape for resale housing remains fractured. It could be argued that these negative numbers are due not only to higher borrowing costs and the stress testing measures but to a lack of supply. In December only 4,308 new listings came to market. Last December 6,289 new listings came to market, a decline of over 30 percent. Heading into 2019 there were only 11,431 properties in the greater Toronto area available for buyers, a decline of more than 11 percent compared to the almost 13,000 available properties last year at this time. Most of the available properties are located in the 905 regions of the greater Toronto area. In the City of Toronto, there are only 3,270 properties available to buyers. In fact, 72 percent of all available inventory is located in the 905 regions.

These inventory levels mean that there will be neighbourhoods, particularity in the City of Toronto, where demand far outstrips supply. This was evident in Toronto’s eastern neighbourhoods, (Riverdale, Leslieville, Beaches), were even in December all properties reported sold generated sale prices exceeding their asking price by more than 100 percent. Semi-detached properties in these neighbourhoods sold for more than 105 percent of their asking prices, and in just 11 days or faster.

The inventory shortage can be dramatically illustrated by looking at detached and semi-detached properties available for sale in the City of Toronto. At the end of December, only 377 new detached properties came to market, not many more than the 340 that sold in the month. The situation for semi-detached properties is even more severe. At the beginning of this year, there were only 154 active listings in the entire City of Toronto, only 38 more properties than the 116 semi-detached properties that sold in December. The situation for condominium apartments parallels the shortage of semi-detached properties.

These property shortages would normally result in substantial price appreciation. Normal however is no longer 2.5 percent ve-year fixed mortgage interest rates. Bank posted rates are currently 5.59 percent, and even if that isn’t the rate borrowers will have to pay, the buyers will, because of stress testing, be required to qualify at that rate. The disappearance of cheap and easy money is now driving the Toronto and area market place.

Looking forward, certainly, in the short term, there is nothing on the horizon that will see any dramatic changes to the current Toronto real estate market. Sales volumes will be lower than historic norms, and average prices will continue to moderate. Currently, unemployment numbers are at a 40-year low. Subject to stability in the mortgage markets, wages should start to rise beyond inflationary levels which with time will ease our prevailing affordability problems, which in turn should see moderate increases in sales volumes and to some extent in average sale prices. The process will be slow with both buyers and sellers at times adjusting painfully to the new resale landscape.

Prince Edward County Real Estate Market Update – Year End 2018

With the first few days of 2019 under our belt, we can now look back and see what an interesting and tumultuous year 2018 has been for the real estate market in Prince Edward County (“the County”). There is no question that this last year has definitely been a year of adjustment following the correction that occurred in the spring and summer of 2017 with the introduction of the Ontario Fair Housing Plan and related messaging from the provincial government that the overheated real estate market needed to be reined in. Moreover, subsequent contributing factors including a series of successive interest rate hikes and the imposition of the stress test which significantly tightened qualification requirements for financing had a marked impact on affordability, and combined to throw cold water onto the market, and restore a sober sense of reality to both buyers and sellers. Having said that, while sales are down across the County, much like most other real estate markets in Southern Ontario, the intricacies of the market are a little more complex and nuanced as buyer demand has remained remarkably strong and steadfast in the County as reflected by the impressively robust sale price trajectory that has continued to break new bounds and set new thresholds throughout the year.

The statistics published by the Quinte & District Association of REALTORS® (“the Quinte Board”) for December are further confirmation that 2018 marked a return to reality from the frenzied market experienced the preceding year, and to some extent can be characterized by regrouping, adjustment and taking stock. Sales were down over 46% from last year with only 15 properties changing hands compared to 28 in December 2017. With the year at an end, a compilation of the sales numbers for each month as reported by the Quinte Board shows that sales of properties across the County for all of 2018 totalled 532 which is 19% fewer than sold in 2017, the year previous. Clearly, that demonstrates a moderation in the market year over year, and is confirmation that the market correction that occurred in urban centres such as the Greater Toronto Area and neighbouring markets clearly had an impact on the County, but interestingly as suggested other market indicators qualify this conclusion or are evidence of ongoing strength and sustainability in the area.

Listings, for instance, remained in relatively short supply and there was little sign of distress selling in the market, or a rush to unload real estate in the County. Despite a year-end boost in listings with 60 properties coming onto the market in December compared to 35 last year in the same month, year over year there was only a 5% increase in new listings in 2018 with a total of 1240 compared to 1181 in 2017 when supply and inventory were remarkably tight. With the decline in sales, however, year-end inventory was up with 382 properties in the County available for sale compared to 207 last year at this time.

But price is probably one of the most interesting indicators as to the state of the County real estate market and stands as confirmation of stable interest and demand in the County. There was a dip in the average sale price in December coming in at $282,800 compared to $418,996 last year, constituting a drop of over 32%, but as discussed in previous market reports, in a smaller market like the County where only 15 properties changed hands, the particular cross-section of properties that sold in a given month inevitably has a disproportionate impact on the numbers, and results in larger statistical swings. When spread over the entire year, however, a clearer picture comes into focus. Despite a slower start to the year when three out of the four months of the first quarter registered a negative year over year price differential, each of the successive months for the rest of the year, (with the exception of December), racked up impressive price gains. This contributed to a boost in the annual average sale price of over 11%. Specifically, the average sale price for properties in the County for 2018, calculated on the basis of the average sale price reported for each month by the Quinte Board, came in at $422,732 compared to $379,445 for 2017.

Finally, those properties that did sell took only three days longer on average to sell (70 compared to 67) than they did last year when market conditions were much more heated and frenetic, and supply was even tighter.

All of these indicators taken together suggest that despite some calming and moderation over the last year, the County real estate market is stable and has legs going into 2019. Broader economic conditions continue to be generally favourable with positive economic output and job creation over the end of last year and extending into the new one. While the cost of borrowing is likely to continue to increase over the long term, (though potentially not as quickly as earlier anticipated), the County is well positioned to weather potential market upheaval given its relative affordability, and its status as a preferred destination to live and invest.

Muskoka Real Estate Market Update – January to September 2018

As the third quarter of 2018 came to an end, it remained unclear if a shift was taking place in the broader Muskoka and area marketplace. Generally, we see declines in the number of waterfront, recreational properties sold, concurrently with a strengthening of average sale prices, except for some isolated markets. At the same time inventory levels have increased in some regions, a shift from the previous three years which witnessed sharp declines.

In the broader market, year-to-date 1,126 recreational properties were reported sold in Bracebridge, Gravenhurst, Huntsville, Lake of Bays and the Muskoka Lakes. Last year 1,140 properties were reported sold over the same period, a mere decline of just over 1 percent.

Notwithstanding the foregoing not all markets and regions are performing similarly, as is demonstrated by an analysis of the market activity on Muskoka’s big lakes.

Lake Muskoka and Lake Joseph saw fewer listings come to market during 2018 than the same period in 2017. Last year 819 properties came to market during the first 9 months of the year on Muskoka’s big lakes. This year that number declined to 733, approximately 10 percent fewer listings than to September 2017. Not only did listings decline, but sales on the big lakes also drifted downward in 2018. There were 28 waterfront sales reported on Lake Joseph during the first 9 months of 2018. Last year there were 31. This year 27 waterfront properties were reported sold on Lake Rosseau, a slight drop from 31 sales that took place last year. In the case of Lake Muskoka, the decline was more significant. Reported sales decreased by more than 21 percent, from 156 to 123 properties.

Significantly the largest declines in reported sales on the big lakes were properties having a sale price of $3 Million or more. In 2017 there were 41 waterfront properties reported sold having a sale price of $3 Million or more. This year (as of the end of September) only 19 were reported sold in this category, a decline of more than 50 percent. Explanations for these declines vary: lack of good inventory, increasing cost of money, and longer-term concerns related to Canada’s financial stability. The recent turmoil in the world’s equity markets is likely to further aggravate this market price point.

It is not surprising that the average sale price for properties representing sales over $500,000 on Muskoka’s big lakes has declined year-over-year. Last year the average sale price for all properties sold in this category came in at $2,189,793. This year that number has dropped to $2,101,323. Clearly more properties with lower price points were selling than higher priced recreational properties. This represents a decline of approximately 5 percent. Days on market for properties in this category increased marginally.

In the broader markets listing inventories are increasing, particularly in the lower price points, although no distinct pattern is evident that allows for market-wide conclusions or patterns. For example, in the Muskoka Lakes region new listings increased in all price categories, particularly properties with a list price less than $1 Million. Conversely, in the Huntsville-Lake of Bays region new listings declined by more than 20 percent, with a 30 percent corresponding decline in sales. It would appear that a market inflection is occurring, but there is insufficient data to accurately explain or define what is happening.

Chestnut Park and its sales representatives continue to dominate the Port Carling office marketplace. Chestnut Park’s dollar volume sales exceeded the closest competitive office by more than 37 percent. Year-to-date Chestnut Park’s sales representatives have completed more than $251 Million in recreational property sales, only slightly off the record high sales of 2017, and were responsible for the sale of 3 properties having a sale price that exceeded $10 Million.

Urban markets have undergone pronounced changes in 2018. This is due primarily to the disappearance of cheap and easy money. There have been five interest rate hikes and now lending institutions are stress testing conventional borrowers. It would appear that this is the new normal and that for the foreseeable future we can anticipate rising interest rates and the continued disappearance of easy money. The natural consequence of these factors is stable and even lower sale prices. In Toronto and area, we have seen a moderation in sales and average sale prices as the cost of money has made exuberant buying prohibitive. There is little doubt that this will influence the recreational market, particularly if inventory levels continue to increase across the entire recreational marketplace. Due to the seasonal nature of the Muskoka and area recreational marketplace, the impact of these broader economic changes will not become apparent until the Spring of next year.

Toronto Real Estate Market Update – October 2018

Prince Edward County Real Estate Market Update – October 2018

Based on recent statistics released by the Quinte & District Association of REALTORS® (“the Quinte Board”), real estate trends that have been developing in Prince Edward County (“the County”) over the last few months appear to be playing out much as anticipated in our earlier reports. Market performance for the area remains strong but sustainable, with one notable qualification. A confluence of forces including consistent demand, relatively stable but limited supply, mixed with stubborn sellers unwilling to budge from their ambitious selling points, are all contributing to steady and relentless price inflation, making affordability the single greatest challenge to the County real estate market moving forward. That, combined with the successive increases in interest rates and the likelihood of more, compounded with the impact of the stress test in qualifying borrowers, means that buyers will have to show ever greater resourcefulness, fortitude and determination in the months to come to secure their property of choice.

October’s numbers simply reinforce this prognosis as most indicators point to more of the same. While new supply was relatively stable, falling year over year by only three listings, sales surged more than 36%. Specifically, 85 new listings came onto the market as compared to 88 in 2017 – a decline of a little more than 3%, bringing the year to date numbers to 1141. This amounts to approximately 5% more than last year’s 1082. On the sales side, 60 properties sold in October across the wards that make up the County compared to 44 one year ago. Year to date sales still lags behind last year’s frenzied market by approximately 16%, coming in thus far at 493 sales compared to 584 at this time last year.

But given these underpinnings and the influence of the factors set out above, the average sale price continued its impressive positive year over year surge for yet another month coming in at $458,766, a whopping 25% gain over October 2017 when the average sale price was reported as $365,619. This builds upon the double-digit price increases that the County has been racking up since the spring of this year. With prices reaching these levels, and financing becoming ever more challenging and expensive, and sellers continuing to insist on top dollar before relinquishing their properties, it comes as no surprise that the pace of sales is somewhat slower. In October the average property took 77 days to sell compared to 69 one year ago, an increase of approximately 12%. Buyers must seriously assess the suitability and value of the property in question, and once committed, engage in tougher negotiations to settle on a price that is acceptable to the seller, but still makes sense and is sustainable to the buyer in all of the circumstances.

That said, there appears to be no decline in the level of interest or appetite for properties in the County. The area continues to be situated in a sweet spot for an increasingly broad demographic, reflecting value despite its escalating price point, to say nothing of its natural attributes, attractive location and characteristics that garner so much attention in the zeitgeist of social media, culture, and the press.

To reiterate, while the market and demand for properties in the County looks positive for the foreseeable future, price and buyers’ ability to pay and manage the cost of servicing their debt load will inevitably be one of the greatest challenges to the ongoing robustness and health of the County real estate market. The broader economic outlook shows promise on a variety of fronts including job creation, output and greater trade stability. But these very factors will likely only further contribute to the likelihood that money will become even more expensive and pose increasing challenges to buyers’ ability to balance their finances and justify that next significant expenditure and foray into the real estate market. And while the County remains comparatively well placed on the affordability front, it is not immune from the potential pressures that a squeeze on borrowing and debt load may impose.

Collingwood Real Estate Market Update – October 2018

Toronto Real Estate Market Update – July 2018

There were no surprises as to the market’s performance in July. There has been a consistent improvement both as to sales volumes and average sale prices since January.  July saw the most dramatic year-over-year improvement. As compared to last year, sales volumes in the greater Toronto area increased by 18.4 percent, and the average sale price was 4.8 percent stronger than the average sale price last July.

In July 6,961 residential resale properties were reported sold in the greater Toronto area. Last year only 5,869 properties were sold. The average sale price came in at $782,129 as compared to $745,971 last July. The average sale price in the city of Toronto came in at $824,336, almost 6 percent higher than the greater Toronto average, notwithstanding that the bulk of the property sales responsible for this average sale price were condominium apartments.

For the first time since the introduction of the Ontario Fair Housing Plan measures, every housing type saw price increases as compared to last year, including detached properties. The average sale price for detached properties came in at $ 1,350,700, an increase of 3.6 percent.  Semi-detached properties increased by 7.4 percent to $935,300, and condominium apartments continued their upward trajectory, coming in at $582,247, an increase of almost 10 percent.  The average sale price for condominium apartments in Toronto’s central districts, where most sales take place (65 percent), came in at $653,137. Translated as the cost for space, central district condominium apartments are now selling for approximately $1,000 per square foot.

July also saw a recovery in the high-end of the market. The high-end of the market, primarily single-family properties, was dramatically impacted by the implementation of the 15 percent foreign buyer’s tax, the new mortgage stress testing, and three rate increases implemented by the Bank of Canada. For example, during the first 7 months of 2018, realtors reported that 1,247 properties having a sale price of $2 Million or more had sold. This number compares very poorly with the 2,625 similar properties that were reported sold over the same period last year, a negative variance of well over 50 percent.

In July this negative pattern was reversed. In July 181 properties having a sale price of $2 Million or more were reported sold. All but 16 of these properties were either detached (160) or semi-detached (5) properties. This compares favourably to the 149 similar properties that sold in July of last year, an increase of 21 percent. It should be noted that this improvement in sales volume is due to a combination of buyers adjusting to the various measures introduced by governments, increased mortgage rates and sellers accepting that their expectations as to the ultimate sale price of their properties had to be lowered. This is reflected in the fact that the average sale price came in at only 98 percent of asking price for detached homes, and in districts where Toronto’s most expensive properties are located, at only 96 percent. Even these figures are not entirely representative since they do not account for any price reduction from the original list price of these properties.

Inventory levels are a concern. Throughout 2018 they have been declining, particularly in the 416 regions. Of special concern are semi-detached properties and condominium apartments. In both categories, levels are now lower than they were last year at this time.  In July there were only 329 active semi-detached properties available to buyers in Toronto, and only 2,583 condominium apartments. Last year there were 2,710 available and that figure was substantially less than the prevailing buyer demand. Due to these shortages, all semi-detached properties sold at 103 percent of their asking price. All condominium apartments sold at 100 percent of their asking price.

Going forward the lack of inventory (semi-detached and condominium apartments) will continue to put upward pressure on average sale prices, but that pressure will be limited. The increase in mortgage interest rates and the implementation of the new mortgage stress testing will limit buyers’ ability to stretch to higher prices as was the case last year. What should result is moderate increases in average sale prices and the number of residential resales. Increases should not exceed 3-5 percent until either interest rates decline, or we see substantial increases in wages and salaries. 

Toronto Real Estate Market Update – May 2018

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