Collingwood Real Estate Market Update

After a brief pause in August which registered steady but not breathtaking sales, the Georgian Triangle real estate market appears to have rallied to the pace-setting groove to which it has apparently become accustomed this season, recording more sales for the month of September than any year since 2005. Some of these sales may have been spurred by the recent increase in fixed term borrowing rates and the prospect of further tightening in the lending regime, prompting some buyers to get off the fence and commit to purchasing. But rather than being a temporary and anomalous blip September’s numbers appear to be part of a broader phenomenon attributable to the Georgian Triangle real estate market being on firm ground and benefitting from the ongoing comparative value, attractiveness and affordability of property available for sale in the area. September’s results therefore build upon this year’s strong performance to date, suggesting that the Georgian Triangle is well positioned to move into the final quarter of 2013 with sustainable growth and healthy sales.

According to the Georgian Triangle Association of REALTORS® (“GTAR”) MLS® Statistic Report for September, 203 properties were sold logging a 28% increase over the 158 sales recorded in September of last year, and 15% more than the 176 sold in September 2011. While the surge in property sales was particularly concentrated in the $100-149,999, $250-349,999 and $600-699,999 ranges the strength of the market was generally felt across the board. In fact sales figures for this September were either better or equal to those for September of last year in every price category but one ($240-249,999). This month’s numbers bring year to date sales to 1644, 8% ahead of last year at this time when 1517 were recorded, and almost 16% ahead of the year previous when there were 1410 sales by the end of September. Total dollar volume for the month increased at an even higher level beating out last year’s performance by 35%, and updated year to date figures to reflect a 10% bump over last year.

New listings were up by 3% with 545 properties coming onto the market in September compared to 529 last year, bringing year to date figures to 5168, 3% behind last year’s total of 5316 at this time. With the disproportionately robust sales pace, however, inventory was down 3.5% from last year with only 2388 active listings recorded at the time that GTAR’s report was created, compared to 2476 last September, and even fewer than the 2501 active listings recorded at this time two years ago.

Not surprisingly, with sales outstripping supply, the average residential sales price year to date is almost 5.5% higher than last year coming in at $332,619 compared to $315,436 last year. The average sale price for single family residential properties for the month of September was $332,830, 3.5% more than the $321,501 average sale price last September. Measured over a twelve month period, the average sale price for this property type is up 6% year over year ($334,529 compared to $315,334) highlighting the steady price increases that have been racked up over the last year.

All in all prospects are good for a healthy fall market. Comparatively speaking, the Georgian Triangle continues to be well placed to weather changing economic conditions, including some variation in the lending environment. Given the tight market and fundamentals which support an optimistic forecast for property sales in the Georgian Triangle as we move into the final quarter of 2013, sellers contemplating putting their properties on the market would be well advised to do so, keeping in mind of course the old adage that pricing should reflect value in the property.

Prepared by Richard Stewart, VP and Legal Counsel Chestnut Park Real Estate Limited, Brokerage

Toronto Real Estate Market Update – August 2013

The summer months saw mortgage interest rates rise to levels not seen for more than a year. In June buyers could find five year fixed mortgages with interest rates at 2.79 percent. It would appear that those historically low rates are now a thing of the past. By the end of August rates had increased to 3.79 and has high as 3.89 percent at one of the major banks. Although 3.89 percent continues to be low by historical standards, it does represent more than a 30 percent increase in rates in less than two months.

During this same period the Toronto residential resale market has begun to heat up, bringing it to the attention of bankers and the Federal Minister of Finance. The Finance Minister implemented a number of measures to slow the housing market July of 2012, including reducing the amortization period to 25 years for high ratio mortgages. The market has clearly absorbed those restrictive measures. The belief amongst economists is that the surge in sales in July and now in August has been driven by increasing mortgage interest rates and the likely possibility that they will continue to increase during the remainder of this year and into 2014. Buyers, particularly at the low end of the market, may be concerned about the risk of increasing rates and are making accelerated decisions now to purchase homes while they are still affordable. The increase in average sale prices is also contributing to this buyer pressure.

In August the average sale price for properties sold in the greater Toronto area was $503,094, an increase of 5.4 percent compared to August of 2012. In the City of Toronto the average sale price was $518,145. This number is moderated by the average sale price of condominium apartments which represent almost 30 percent of all reported sales in the month of August. Detached and semi-detached properties are becoming very pricey. The average sale price for a detached home in central Toronto is now $1,319,539. In the western trading districts detached homes sold for $ 644,354 and were least expensive in the eastern trading areas, coming in at $538,826. Semi-detached homes sold for $ 788,542 in Toronto’s central core, and sold for $501,230 and $507,819 respectively in Toronto’s western and eastern districts. These average prices represent year over year increases of 4.7 percent for detached homes and 8.7 percent for semi-detached properties.

The least expensive properties in Toronto are condominium apartments. In August the average sale price was $357,572. Although much lower than detached and semi-detached properties, August’s average sale price was 2.3 percent higher than a year ago. Given the rising mortgage interest rates and average sale prices, it is not surprising that the demand for condominium apartments was soaring in August. The 1,280 condominium apartment sales reported in Toronto represent a 21.4 percent increase in sales compared to last year. As a result of all these sales, Toronto’s condominium inventory is rapidly decreasing. At the end of August there were 4,413 active condominium apartment sales. Last year at this time there were 4,657, a decline of 5 percent.

The number of reported sales overall showed a marked increase compared to August 2012. 7,569 residential properties were reported sold, an increase of almost 22 percent compared to August last year. Moreover, these properties sold very quickly. The average days on market for all properties reported sold was only 29 days. In some trading districts the pace of sales was even more dramatic. Properties in the eastern districts continue to be in demand. All sales of detached houses took place in 19 days, and only 14 days for semi-detached properties. Condominium apartment sales were the slowest taking 36 days in the City of Toronto.

Given the prevailing market conditions we can anticipate similar results for September and October. This could change if mortgage interest rates continue to rise and average sale prices make the purchase of some types of properties prohibitive to some buyers. At the other end of the spectrum, being the least expensive, condominium apartment sales will continue to outpace the rest of the market. At the end of August 61,704 residential sales have taken place in 2013. At its current pace the Toronto market will produce more than 85,000 sales, matching and perhaps exceeding the 85,501 sales that took place in 2012.

Prepared by: Chris Kapches, President & CEO Chestnut Park Real Estate Limited, Brokerage

Collingwood Real Estate Market Update May 2013

The performance of the Georgian Triangle real estate market continues to impress, both on a year over year basis as well as in relation to neighbouring and related property markets. May’s statistics released by the Georgian Triangle Association of REALTORS® (“GTAR”) reveal that the remarkably and comparatively strong pace of sales in the area so far this year shows no indication of letting up. As real estate markets across the region and nationally appear to be showing increasing signs of recovery and stabilization, buyer demand and property sales in the Georgian Triangle are well ahead of the game having avoided much of the downturn experienced in other markets.

In fact GTAR recorded 216 properties sold in May which is the highest number of sales in the area for the month of May since 2007 when 242 properties were sold. May’s unit sales performance is 7% ahead of last year when 202 properties changed hands, and brings year to date numbers to 836 which is 3% more than the 810 properties which had sold last year by this time. As indicated these figures are all the more remarkable given the broader context of economic slowdown and the much discussed and commented upon softening of the real estate market. Significantly, the increase in total dollar volume sold is even more impressive with this month’s figures besting those of last May by a whopping 20%, contributing to a 5% annual gain for total dollar volume sales year to date. Not surprisingly, much of the surge in activity in the area occurred in higher end properties with increases experienced in every price range but one from $300,000 and up. This trend suggests increased economic and consumer confidence as well as a generally more bullish buyer in the Georgian Triangle.

Listings, however, are down 5% annually both for the month of May and on a year to date basis. Only 693 new listings came onto the market last month compared to 730 last May, and 701 for the same month the year before that. Tighter supply with only 2961 new listings so far this year compared to 3113 last year at this time means inventory is down as well, with GTAR recording 2402 active listings in the MLS® system at the time of its report compared to 2590 one year ago.

A reduction in supply and a surge in demand usually mean one thing: more competition for property pushing prices up, and GTAR’s statistics appear to support this. The average residential sale price year to date in the Georgian Triangle is $333,849, 7.7% higher than last year at this time when it was calculated to be $310,119. The effect of the tightening market is even more evident when the average sale price for single family residential properties for the month of May is compared to last year. This past month the average sale price for this category of property in the area came in at $341,434 compared to $289,647 in May 2012, a spike of almost 18%. Activity measured over a longer period of time and spread over a larger number and wider variety of transactions, however, tends to be a more accurate reflection of price trends, softening the effects of arbitrary or fortuitous concentrations in activity or other market anomalies. Calculated over a twelve month span compared year over year, price appreciation is a more modest 4% with this May’s average sales price for the previous twelve month period for single family residential properties coming in at $330,886 compared to $317,502 one year ago.

These numbers and this report reflect the genuine and stable demand for Georgian Triangle properties, and the ongoing attractiveness and perception of value of real estate investment opportunities in the area. If current trends continue, however, pressure on inventory could push prices higher, testing affordability somewhat, particularly if financing conditions and costs become more onerous and costly.

Prepared by: Richard Stewart, VP and Legal Counsel Chestnut Park Real Estate Limited, Brokerage

Toronto Real Estate Market Update May 2013

The month of May produced statistics that continued the string of strong resale activity in the Toronto market place. Notwithstanding that May of this year did not exceed last May’s sales results, in historical terms May 2013 was an outstanding month. May of last year was the pinnacle of the 2012 market. Following May, and especially after the introduction of the more restrictive lending practices by the Federal Minister of Finance, the Toronto real estate market softened, and remained soft for the remainder of 2012.

In May the Toronto Real Estate Board reported 10,182 residential sales. This compares very favourably with the 10,544 properties that were reported sold in May 2012. This represents a mere 3.4 percent decline. As reported in previous up dates the market is not uniform, with some sectors outperforming others.

Up until May, the high end market was lagging, as compared to last year. This May the high end market ($1 million and higher) has made a resurgence. This May 702 properties in this category were reported sold. This compares with 668 that were reported sold in 2012, an increase of 5 percent. At the very high end ($2 million or more) 120 property sales took place, an increase of 20 percent compared to the 100 properties in this category that sold last year. Until this month high end buyers appeared hesitant to enter the market. Their perception of value and the exorbitant and offensive combined land transfer tax no doubt were responsible for the hesitation. It is too early to tell if this resurgence is due to reduced asking prices or pent up demand, or both.

At the other end of the market, the condominium apartment sector continues to underperform, but not nearly as poorly as has been forecast. Last year 1,632 condominium apartments in the City of Toronto sold. This year 1,499 were reported sold, a decline of 8 percent. The decline was more dramatic in the 905 region, with sales down by 16 percent. Despite these declines, averages sale prices remained strong. Average sale prices for condominium apartments in the 416 region increased 1.2 percent to $372,768, and even in the 905 region, where sales were very slow compared to last year, prices moderately increased by 0.9 percent.

The total number of active condominium apartment listings is also not unfolding as forecast. In May in the City of Toronto there were 5,003 active listings. This compares very favourably to the 4,930 that were available in May 2012, an increase of only 1 percent. If the average sale price for all property types continues to rise, condominium apartments, being the least expensive housing form in Toronto, could see a resurgence, particularly if the available listing base stays low.

At the end of May there were 22,677 active listings. This represents a 10.8 percent increase compared to the 20,462 residential resale properties available for sale in 2012. This number of available properties represents 2.8 months of inventory. In May of last year there was only 2.2 months of inventory. Notwithstanding this increase in supply, the available inventory remains historically low, and still in the range of a seller’s market. In the City of Toronto (416 region) the available supply is slightly higher, coming in at 2.9 months of inventory. The eastern trading areas remain the most active with only 2.2 months of inventory with sale prices on average exceeding the asking price, in some districts coming in with a sale to list ratio of 103 percent.

Sales in May continued at a very brisk pace. In the greater Toronto area all properties sold in 23 days. In the City of Toronto sales were achieved even quicker, in 22 days. As has been the case, sales in the eastern districts took place at a blistering pace, taking only 18 days for all properties on average to sell. The condominium apartment market remains the slowest. In the greater Toronto area all sales were achieved in 32 days. The same sector in the City of Toronto was faster, all sales occurring in only 30 days, another sign that the condominium apartment market is healthier than forecast.

It is not surprising that the average sale price continues to rise. Over 10,000 sales on average taking place in only 23 days will put pressure on prices. In May the average sale price for all properties sold came in at $542,174. This is a 5.4 percent increase compared to the average sale price of $514,567 achieved in 2012. Average prices in the City of Toronto continue to rise as well. A typical home in the City (416) now costs $600,791. The most expensive properties in Toronto are detached homes in Toronto’s central districts. The average price for properties in these districts is $1,335,879, and they all sold in only 19 days.

Going forward I anticipate that the market will slightly moderate, but not to the extent that it did in the second half of 2012. Rising inventory levels should ease the pressure on buyers, enabling them to purchase properties other than in competitive situations. Ultimately rising average sale prices will make some of Toronto’s real estate unaffordable, resulting in some moderation of sale prices. This scenario is likely to play out as we head into the last part of 2013. Over the next few months I anticipate a strong market, with month end data showing positive variances compared to the same month last year.

Prepared by: Chris Kapches, Senior Vice President and Legal Counsel Chestnut Park Real Estate Limited, Brokerage

Collingwood Real Estate Market Update Spring 2013

The Georgian Triangle property market continues to fire on all cylinders racking up yet another impressive performance for the month of April and standing out as one of the beacons of strength and stability in the Ontario real estate market. Indeed April’s sales figures released by the Georgian Triangle Association of REALTORS® (“GTAR”) logged a whopping 213 properties sold, higher than any number recorded for the month of April according to GTAR’s archives over the last decade.  To surpass the level of sales set last year in strong and stable market conditions is truly a notable accomplishment. Affordability, quality of life, diversity of property choices and options, and comparative value all seem to be factors contributing to the ongoing strength and legs of the Georgian Triangle real estate market.

In April, 213 properties changed hands, 4% more than last year in the same month which had 205 sales, and almost 29% more than sold last month and in April 2011, when 167 properties sold in each case. Year to date figures are 2% ahead of last year with a total so far for 2013 of 620 properties sold compared to 608 last year at this time. This number also exceeds all year to date sales figures for this time going all the way back to 2004 when 630 properties were recorded as sold by April’s month end. These are truly impressive figures underlying the resilience of the Georgian Triangle market and the obvious attractiveness of this area to today’s buyers.

Interestingly, however, total dollar volume of sales is down year over year by 4%, highlighting the fact that while the market may be robust, sales appear to be concentrated more at the mid and lower price ranges, reflecting the activity in neighbouring rural and urban trading areas where high end properties are not moving as quickly, and when they do sell, it is often only after one or more price reductions. Affordability and real value appears to be top of mind for most buyers who are not prepared to pay any price for their next home or investment and rather in many cases settle on a price only after serious and tough negotiations with the seller. Consistent with this, sales in the one million dollar and up range for the month of April lag behind last year at this time while unit sales in most price categories between $250,000 and $800,000 exceed those from the year previous.

Listings are down 6% from last year with only 706 new properties coming onto the market in April compared to 755 in April 2012. Year to date figures are not much different coming in at 2268, 5% behind last year’s tally of 2383. All this contributes to a tighter market, reflected in the lower inventory of active listings which is 4% lower than last year with 2226 properties recorded as active listings in the MLS® system at the time GTAR’s report was created compared to 2320 last April.

Not surprisingly, strong demand with tighter supply means higher prices, though admittedly only modestly so. Year to date the average residential sale price is up 4.3% coming in at $331,267 compared to $317,534 last year at this time. The average sale price for single family residential properties this April was $318,706, 1% more than last April when it was calculated at $315,336. Measured over a longer twelve month period, the numbers are relatively consistent, stable and sustainable marking only a 1.3% increase coming in at $325,023 compared to $320,755 measured over the same length of time the year previous.

All things considered, GTAR’s statistics for the month of April reflect a remarkably positive performance for the Georgian Triangle real estate market, if somewhat qualified by a softer higher end. That said, mixed messages on the economic front both domestically and south of the border, to say nothing of the ongoing instability in global financial and labour markets means that some degree of uncertainty will continue to percolate through to buyers’ intentions and their willingness to part with their money. As stated in earlier reports, sellers will have to keep this in mind in tempering their expectations and ensuring that their list price reflects value.

Prepared by: Richard Stewart, VP and Legal Counsel Chestnut Park Real Estate Limited, Brokerage

Feature image via The Picot Team, Chestnut Park Real Estate Collingwood

Muskoka Real Estate Market Update Spring 2013

The Muskoka real estate market started the first third of the year in a slower gear than it did during the same period in 2012. This was true for the entire recreational marketplace, including Haliburton Highlands (where Chestnut Park now has a presence), Lake of Bays and the Muskoka Lakes. At this stage the explanation for this slower market pace is two fold. Early data indicates that substantially fewer properties have been listed for sale by sellers. Less inventory means fewer sales.

The explanation for the decline in available recreational properties for sale is due to weather conditions. The 2012 winter was extremely mild. Access was made easy, and the warm conditions in March and April resulted in numerous sellers listing their properties early in order to take advantage of conditions that were conducive to spring viewings and sales. The winter and early spring of 2013 have been the polar opposite of 2012. Substantial amounts of snow made access difficult, and weather conditions were anything but conducive to cottage viewings. In April the region experienced severe flooding, with many boathouses, and in some cases cottages, submerged in water. Even as this report is being prepared (early May) the lingering effects of the flooding in the region are still negatively impacting the recreational resale market.

In the first third of 2013 overall recreational sales as reported by the Muskoka, Haliburton, and Orillia Board were off by 26 percent. In 2012 130 sales had been reported, whereas only 93 were reported this year. Sales on the Muskoka Lakes, Lake of Bays, and in the Haliburton Highlands were all off by 20 percent. On the Muskoka Lakes from 25 to 18 sales, 20 to 16 on Lake of Bays, and 35 to 28 in the Haliburton Highlands.

Although the correlation to inventory levels is not identical, the connection between lower sales and available properties for sale is quite apparent. Total active listings at the end of April for the region were down by 20 percent, from 1027 in 2012 to 822 in the first third of this year. The Muskoka Lakes have seen a 17 percent drop in inventory from 240 available properties to 199. Lake of Bays shows only a 6.3 percent decline, from 110 to 103, with the highest decline in the Haliburton Highlands, from 295 to 231 available properties, a drop of 21.5 percent.

The first part of the year for recreational markets is not an accurate barometer of how the market will perform throughout the remainder of the year. There is no doubt that the pace of sales will increase, however, the assessment of the market at the end of 2012 continues to apply. The softening of sales throughout Canada, and in particular in the major metropolitan areas like Toronto and Vancouver will have an impact on recreational property sales. High-end property sales in Toronto have experienced a substantial decline. Although not all the factors impacting high-end property sales in Toronto apply to Muskoka and the region (i.e. the double land transfer tax) buyer resistance to real or perceived inflated prices will be the norm in 2013.

As was indicated in the year-end market report, the key to sales is pricing. Recreational properties represent discretionary purchases. In times of instability, that is broader markets that are showing some weakness, discretionary purchases, not driven by need, cause buyers to sharpen their pencils, ensuring that there is value to their purchases. Realistic pricing will always overcome the broader economic considerations that may be negatively influencing buyers.

Prepared by: Chris Kapches, Senior Vice President and Legal Counsel Chestnut Park Real Estate Limited, Brokerage

Toronto Real Estate Market Update April 2013

By any standards other than a comparison to April 2012, the Toronto residential resale market performed brilliantly this month. April 2012 was one of a string of months in the early part of last year that were on track to achieve record-breaking statistics. April 2013 will unfortunately be compared to last year, particularly by journalists, who only see the decline year-over-year, and not the absolute numbers achieved.

In April, 9,811 residential resale properties were reported sold. This is only a 2 percent decline compared to the 10,021 properties reported sold last year. As has been the case throughout 2013, the market remains disjointed with sales of various property types in various trading districts selling at practically light speed, with other property types finding some market resistance.

All properties in the greater Toronto area sold in only 23 days (on average). This is faster than the 24 days that sales took place in March. In February it took 28 days for properties to sell. The pace of sales, as well as the volume, has been accelerating as the year has progressed. In some trading districts the pace of sales was astounding. For example, all semi-detached properties in the eastern trading districts sold in a mere 10 days. All detached homes sold in only 15 days. Even in Toronto’s most expensive central districts all properties sold very quickly. Semi-detached houses sold in 16 days, and detached homes, which had an average sale price of $817,649, in only 18 days.

The drag on the market was the condominium apartment sector. In central Toronto, where more than 60 percent of all condominium apartments for sale are located, it took 31 days for sales to take place. Condominium apartments accounted for more than 30 percent of the entire greater Toronto inventory of properties available for sale in April.

Overall inventory levels are increasing as new listings come to market. In April 18,270 new listings were placed on the market by sellers, an increase of 10.9 percent over the 16,470 that became available last year. At the beginning of May there were 20,866 homes for sale in the greater Toronto area, an increase of 13.5 percent compared to 2012. There are now 2.9 months of inventory in the City of Toronto. Last year at this time inventory levels were at 2.2 months. Expect inventory levels to increase as the year unfolds. An increase in inventory levels may not impact the number or speed of sales, but it will definitely impact average sale prices, as we saw in April.

In April the average sale price increased to $526,335, one of the lowest year-over-year increases this year. April’s average sale price was only 2 percent more than the $515,888 achieved in 2012. This moderate average sale price increase was no doubt impacted by the still sluggish high-end market. In April 606 properties having a sale price of $1 Million or more were reported sold. In 2012 643 were sold, a decline of 6 percent.

A bright spot in the market was the increase in the average sale price for condominium apartments. Since condominium apartments account for such a large portion of the overall market, a decline in average sale prices will be negatively felt throughout the market. In April, however, the average sale price for condominium apartments in Toronto increased by 5.6 percent to $379,266. Unfortunately there was a 5.9 percent decline in the 905 region, but that marketplace accounts for much fewer sales than the City of Toronto.

The number of condominium apartment listings is higher than in 2012, but not the volume that was forecast. In April there were 4,755 condominium apartments for sale in Toronto (with 1,990 apartments in the 905 region). This is only an 8 percent increase compared to the same period in 2012. In the central districts, where most condominium apartments are to be found, there were 3,045 apartments available for sale. Last year there were 2,608, an increase of 17 percent year-over-year. 17 percent is not substantially higher than the 13.5 percent increase in listings in the greater Toronto area marketplace for all property types.

April finished strong, and there are no economic factors that would cause May to be any less active. Last May 10,545 properties were reported sold. That represented the peak of sales in 2012. Following May sales began to decline throughout the remainder of 2012. This year the opposite should occur with sales remaining strong, posting positive variances compared to 2012 to the end of the year.

Prepared by: Chris Kapches, Senior Vice President and Legal Counsel Chestnut Park properties in the Toronto area

Luxury Market Picks Up

After a slow start, demand for luxury homes is regaining momentum in most major centres.

Mississauga, ON (April 30, 2013) – Spring is in the air and nowhere is that more evident than in the country’s luxury housing market. After a subdued start in the first quarter, demand for upscale properties is once again on the rise.

Eight out of the 16 major residential housing markets examined posted sales on par or ahead of last year’s levels in the first three months of the year. Percentage increases were led by Calgary (50 per cent), Edmonton (41 per cent), Regina (10 per cent), Saskatoon (6 per cent), Winnipeg and London-St. Thomas (five per cent), followed by Quebec City at three per cent. Six markets posted new records for first quarter sales, including London-St. Thomas, Hamilton-Burlington (which matched the record 2012 pace), Quebec City, Regina, Saskatoon, Edmonton and Calgary. For the second consecutive year, Greater Toronto secured the top spot for the greatest number of upper-end sales in the first quarter.

“Luxury sales were slow out of the gate in 2013, but momentum is clearly starting to build,” says Gurinder Sandhu, Executive Vice President and Regional Director, RE/MAX Ontario-Atlantic Canada. “A growing number of purchasers are moving off the sidelines and into the market—even in centres that reported a dip in first-quarter sales. All the indicators are pointing to a traditional spring market poised for considerable growth.”

Report courtesy of RE/MAX

Toronto Real Estate Market Report Spring 2013

There was a pronounced resemblance between the performance of the Toronto residential resale market in February and in March. In February sales were off by 15 percent compared to February of last year, while average sale prices rose moderately by 2.1 percent. Upon deeper review it became obvious that the market was fractured, with some sectors being very active, in some cases frenetic, while others lagged.

We see more of the same in March. March sales were off by 17 percent compared to March of 2012. Notwithstanding this decline in sales, average sale prices for all properties sold in the greater Toronto area rose by 3.8 percent. The Toronto Real Estate Board reported 7,765 properties sold in March. In 2012, 9,385 properties were reported sold. As in February, those properties that were sold were sold in almost record time, at speeds consistent with a strong seller’s market. In February all sales took place in 28 days. In March the pace of sales increased by almost 17 percent to 24 days. The pace of sales is inconsistent with declining sales.

The explanation for this inconsistency is to be found in the performance of the various Toronto market sectors. Properties coming to market with price points ranging from $300,000 to under $1,500,000 sold quickly, and for the most part in excess of the asking prices. For example, it was not uncommon for trading areas in the west and eastern districts of Toronto to report average sale prices (for the entire district) that exceeded the asking price. This phenomenon was less prominent in the central districts where house prices remain the most expensive in Toronto. In the central districts the average sale price for detached houses came in at $1,302,359 while semi-detached homes sold for $771,232, approximately $250,000more than semi-detached homes in the west and eastern trading areas.

The pace and the number of sales in the high end of the market and in the condominium apartment sectors continue to be a drag on the overall market. There were 11 percent few high-end properties ($1 Million or more) sold in March of 2013 compared to the same month last year. It should be noted that is a promising improvement compared to February’s results. In February the high end sector was off by 18 percent. The improvement was more dramatic for properties having sale prices in excess of $2Million. In February that marketplace was off by 27 percent. InMarch, the decline was only 7.6 percent compared to March 2012. In actual numbers, March saw 462 reported sales having a value of $1 Million or more (521 in 2012) and 72 having a value of $2 Million or more (78 in 2012).

The condominium apartment sector continues to lag.Whereas the overall market (including condominium apartments) saw all sales take place in 24 days (on average) in Toronto it took condominium apartments 32 days to sell, 33 percent longer. Central Toronto was slightly more robust with sales taking place in 30 days. Last year sales took place in 28 and 26 days, respectively. By comparison, detached and semi-detached homes in March were selling in less than 24 days and as quickly as 12 days in some trading areas (the eastern districts).

There are two aspects of the condominium apartment market that were encouraging in March. Firstly, average sale prices for condominium apartments actually increased by 2 percent compared to last year to $367,595. Secondly, the market is not being overwhelmed by inventory. In the city of Toronto there were 4,330 condominium apartment listings. This is only 8 percent higher than the number of listings on the market in 2012. In this regard the central districts, where the highest concentration of condominium apartments is to be found, did not fare as well. There condominium apartment inventories increased by 39 percent, from 1956 units for sale in 2012 to 2,733 in March of this year. It was also encouraging to see that in some trading areas sale prices of reported condominium sales were equal to or exceeded the asking price.

Going forward,April will no doubtmirror the performances of February andMarch. Some sectors of themarket will be extraordinarily strong, while condominium apartment sales, and less so high-end property sales, will be a drag on the market. At this time there is nothing in the economic forecast nor is there any likelihood that there will be any changes to the stricter mortgage lending requirements that would cause the market will move to a higher gear.

Prepared by Chris Kapches

Toronto Real Estate Market Update Winter 2012-2013

The Toronto residential resale market provided some intriguing data for the month of February. Looked at as a whole it would appear that it is undergoing a negative shift, the continuation of a trend that started in the second half of 2012 and has continued into this year. On closer inspection we see a fragmented market, with some sectors as robust as the record breaking pace of early 2012, and others clearly lagging, dragging the overall performance of the market into negative variance territory.

In February, 5,759 properties were reported sold. In 2012, 6,809 properties were reported sold by the Toronto Real Estate Board, a decrease of more than 15 per cent. Notwithstanding the decline in sales compared to last year, the average sale price increased, but more moderately than recent months. Last February the average sale price came in at $500,249. This year it increased to $510,580, an increase of 2.1 percent. Increases over the past few months have been in the 5 to 7 percent range.

Interestingly enough, the sales that were recorded took place at a pace normally associated with very robust markets. In February all reported sales took place in 28 days (on average) after they were listed. Any time the average days on market is less than 30 days it reflects a seller’s market, which is ironic in light of the fact that compared to last year, the market was off by more than 15 percent.

Last year, when the market was on pace to smash all previous records for sales, the average days on market was 24 days. A deeper analysis of the market indicates that some sectors and housing types are more robust than others. The high-end, or ‘luxury’ home, market is showing weakness compared to last year. Similarly the condominium apartment market is lagging compared to 2012.

In February 2012, 407 properties having a value of $1 Million or more were reported sold. This year that number declined to 334, a decline of 18 percent. The decline in the very high-end properties, having a value of $2 Million or more, has been even more dramatic. Last year 69 properties in this category were reported sold. That number declined to 50 this year, a decrease of more than 27 percent. This decrease has an obvious impact on the monthly average sale price.

It is difficult to pinpoint why this area of the marketplace is not performing well. One explanation is that buyers can no longer obtain a high ratio mortgage on properties with sale prices in excess of $1 Million. It might also be that the value of high-end properties, particularly with values in excess of $2Million, are no longer supportable. During the robust market between the spring of 2009 and last year, prices of high-end properties were strong. Perhaps they pushed the limits that the market could bear. With a second land transfer tax, purchases in excess of $2 Million become quite onerous. For example the combined provincial and municipal land transfer tax a buyer of a $2.5 Million property pays is an outrageous $92,200.

The other sector that is lagging is the condominium apartment sales. I do not believe, as is often reported in the press, that this is primarily due to an overwhelming increase in inventory. In the Toronto (416) marketplace, sales in February were down by 20 percent. Average sale prices declined by 4.7 percent. On average it took 36 days for a listed condominium apartment to sell, 33 percent longer than all properties in Toronto. Detached and semi-detached homes in Toronto sold very quickly, as low as 15 days in Toronto east end districts to 20 days in Toronto’s central districts. In comparison, condominium apartment sales are at best tepid.

Condominium apartment inventory has not increased dramatically compared to last year. The total number of condominium apartments available for sale in the Greater TorontoArea (416 and 905) was 5,458. Last year there were 5,066, an increase of slightly more than 8 percent. In the city, where the bulk of condominium apartments is to be found, the increase is less dramatic. Last year there were 3,712 available for sale. In February of this year there were 3,785, an increase of a mere 73 additional condominium apartments. Considering that sales are off by 20 percent, inventory levels have actually declined. It may be that we will see inventory levels grow as we proceed through the year, but it has not happened yet.

So the reputed cause for the slow down in condominium apartment sales cannot be attributed to higher inventory levels. Rather it is not doubt due to the restrictive mortgage lending rules that the federal government has implemented. Condominium apartments are usually the first and only choice for first time buyers. In the city of Toronto (416), the average sale price in February was only $352,614. There are reports that indicate that 17 percent fewer buyers qualify under the new stricter lending guidelines. A number that is not inconsistent with the 20 percent decline in the condominium apartment market in 2013.

Prepared by: Chris Kapches, Senior Vice-President and Legal Counsel

February 2013

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