Tagged ‘condo‘

Toronto Real Estate Market Update – July 2017

It is safe to say that the lull in the Toronto and area residential resale market is not due exclusively to the summer doldrums, although the seasonal slowdown that happens every year in July and August is no doubt adding to the slow market.


In July, 5,921 residential properties were reported sold for the greater Toronto area. That is a far cry from the 9,929 properties reported sold for the same period in 2016, a decline of more than 40 percent. July was the second month in a row when year-over-year sales declined by more than 35 percent.
Average sale prices continue to be higher than the same period last year, but not by the staggering increases that we experienced earlier in the year. In July, the average sale price came in at $746,218, 5 percent higher than the average sale price of $710,471 achieved last year. The average sale price for the greater Toronto area is down dramatically from prices achieved at the beginning of this year. For example, the average sale price for all properties sold in April was $919,449. Since then the average sale price has decreased by almost $175,000 or more than 18 percent.
This unprecedented rapid decline in average sale prices has put tremendous pressure on lenders trying to determine current fair market value. As a result, buyers who purchased closer to April with closing dates in late June and July are having trouble funding their purchases as lenders reduce the amount they are prepared to loan based on the declining value of properties. Although this is a temporary and transitional period it is an unpleasant place to be if you are a seller who has bought and is having difficulty selling in the face of rapid declining average prices or a buyer whose financial institution is reassessing the amount of financing it is prepared to advance.
Buyers, who have hit the pause button, waiting to see how far prices will drop before they re-engage have more choice than they have enjoyed for a number of years. In July, 14,171 new listings came to market, 5.1 percent more than the 13,482 new properties that came to market last July. Added to the increase in inventory in May and June, at the end of July there were 18,751 properties available to buyers in the greater Toronto area, more than 65 percent than the paltry 11,346 properties available in July last year. Although the difference in the number of available properties this year compared to last is stunning, on a 12-month moving average at the end of July those 18,751 active listings still represented only 1.3 months of inventory. A balanced market is represented by 3 to 4 months of inventory. If the market picks up in the fall, as is expected, supply could once again become a problem.
Buyers are taking longer to make decisions about buying properties. In July, all properties sold (on average) in 21 days. Last year it only took 16 days for all properties to sell. Detached properties appear to be taking longer to sell than semi-detached and condominium apartments. In July, it took 22 days for detached homes to sell. Semi-detached properties sold in only 19 days and condominium apartments sold in 20 days and only 19 days in Toronto’s central districts were most of the condominium apartment supply is located. The only explanation for this difference is price-point. Less expensive properties continue to sell quickly.
This is clearly the case with condominium apartments, where a supply problem is developing. In July, there were 2,710 condominium apartments for sale in the City of Toronto. Last year there were 3,307 apartments. We enter August with 29 percent fewer available condominium apartments for buyers to buy. There will be tremendous pressure on condominium apartment prices, as more buyers begin competing for an ever-shrinking inventory in the fall. It’s not surprising therefore that in Toronto all condominium apartments sold for 100 percent (on average) of their asking price in July.
The change in the residential resale market, and the speed with which it has changed, is very confusing. There has been no change in the economic fundamentals between mid-April and the end of July, yet the market is substantially down in average price and in volume. The provincial foreign buyer tax in itself cannot be responsible for this tectonic shift. By the government’s own admission, foreign buyers represented only about 5 percent of all sales. This is a classic example of the market changing because of psychology. But at the end of the day, the demand that was in the market in April is still there today, and at some point in time, perhaps when buyers perceive that the botton has been reached, those buyers will be back in the market, perhaps not as exuberantly as before, but they will be there.
We enter August in an uneven market. Condominium apartments continue to sell briskly with supply declining. Detached and semi-detached properties are slower to sell as average prices declines.

Toronto Real Estate Market Update – June 2017

June’s residential resale market data is as bewildering as the data was in May. The attention getting news is that sales were lower by 37.3 percent compared to sales achieved in June 2016. Last year 12,725 properties were reported sold. This June only 7,974.



Normally when sales are off by almost 40 percent other key market factors are also trending into negative territory. For example, the average days that properties are staying on the market, and the sale price to list price ratios. Ironically these aspects of the market are showing resilience. In June (on average) all properties reported sold spent only 15 days on the market. During June 2016, all properties were reported sold in only 15 days as well. It must be remembered that last year was a record breaking year for residential property sales in Toronto.
Not only did most properties sell quickly, but they sold on average for their asking price or more. Detached houses in the City of Toronto all sold for 100 percent of their asking price. In the eastern trading areas, they sold for 101 percent. Semi-detached property sales for the most part were even stronger coming in at 103 percent of their asking prices. Even condominium apartments sold for 101 percent of their asking price.
These two aspects of the market indicate that buyers are prepared to move quickly for the properties they want, and sellers are getting their asking prices or higher, and as indicated above, these sales are taking place at the same pace as they did during last year’s record breaking market. As a footnote, it should be noted that with so many properties having been listed more than once in the lst two months, it is hard to determine if days on market and sales to list ratios are reflecting accurately.
One other aspect of the market should be highlighted. That is the months of inventory. Over the past two months inventory levels in Toronto have increased dramatically. In May inventory levels were up almost 50 percent compared to the same period last year. During the month of June, 19,614 new properties came to market, almost 16 percent more than the 16,918 properties that came to market in 2016. However, notwithstanding these massive increases in inventory, at the end of June active listings only totaled 19,680. At 19,680 available properties for sale the months of inventory was still only 1.2 months based on a 12 month moving average.
Although the market stalled in May and in June, there is still insufficient inventory to meet demand, even with many buyers on the sidelines waiting to see how Toronto’s residential resale market will unfold.
Average sale prices continue to be higher than prices compared to last year. Detached houses in the City of Toronto sold for $1,386,524 a 10.1 percent increase. Semi-detached houses at $987,404 were similarly up by 8.1 percent. The most dramatic increase occurred in the resale price of condominium apartments. The average price in the City of Toronto came in at $552,619, a 23.2 percent higher than last year at this time.
In the central core of the city the average sale price for condominium apartments came in at $619,428, with all sales taking place in just 15 days and at 101 percent of the asking price.
Although prices are considerably higher than they were a year ago, they  have come down dramatically from the highs of April. At the mid point of the month the average sale price for homes in the greater Toronto area was $949,470. That price has steadily drifted down since then. Over the past few weeks it appears have stabilized around $775,000, which is still higher than the average sale price of $747,018 in June of 2016.
It is becoming increasingly clear that there are two types of buyers. Those that either of necessity or opportunity are taking advantage of the historically low mortgage interest rates and buying the properties they like, and those buyers that have hit the pause button on the assumption that prices might yet fall to lower levels. As indicated, it appears that price declines have stopped, but we will not be certain until we have at least 6 to 8 weeks more of average sale price information.
The pattern that is developing is similar to how the market unfolded after the B.C government implemented a foreign buyer tax. The market went into pause mode, with sales declining rapidly. A year later the Vancouver market is reporting record level sales and prices, with the government once again contemplating further measures it might implement to curb the market.
Conclusion for Infographic,
The implementation of the foreign buyers speculation tax has caused the market to stall with sales off by almost 40 percent. Buyers have hit the pause button anticipating lower prices.

Toronto Real Estate Market Update – May 2017

There have been a number of changes in the Toronto and area residential resale market in the last two months, and yet in many ways it continues to resemble the market that had politicians and economists expressing sustainability concerns in February and in March.




How is the market different?
It can be summed up in one word: supply. The number of properties in the market is substantially higher than it was just two months ago and as compared to the same time last year. At the end of May, there were 18,477 listings available to buyers. This compares with only 12,931 listings available in May 2016, a stunning 42.9 percent increase.
The available inventory spiked as a result of all the new listings that came to market. In May 25, 837 new listings came to market. In May 2016 only 17,356 new properties became available for sale, an eye-popping increase of almost 49 percent. In considering the number of new listings that came to market, one must exercise caution. Properties that did not sell during the month were often “listed” on multiple occasions in an effort to find a list price that would attract buyers, especially those properties that were expecting multiple offers and failed to receive them. So how real the new listings number is that has been reported is questionable.
It should also be noted that the bulk of the new inventory coming to market in May was in the 905 region of the greater Toronto area. For example: whereas the increase in inventory was up by 48.9 percent in the greater Toronto area, it was only 24.7 percent in the City of Toronto. More surprisingly, whereas active listings increased by 42.9 percent in the greater Toronto area, the increase in active listings in the City of Toronto was an insignificant 1.8 percent.
This disparity is probably due to the Province’s announcement that it will implement a foreign buyer’s tax of 15 percent of the purchase price of properties. There has been a high concentration of foreign buyers in the 905 region, particularly in Richmond Hill, Markham, and Vaughan. The threat of this tax may have caused sellers waiting for prices to continue rising to put their properties on the market in anticipation of the new foreign buyer’s tax.
How is the market still the same? Firstly, and notwithstanding the plethora of new listing that came to market, the months of inventory available to buyers was only 1.1 months. By any measure this is an inadequate supply, still favouring a seller’s market. By contrast, at the end of May 2016, which was a record breaking year, there were 1.6 months of inventory in the greater Toronto area and 1.9 months in the City of Toronto.
Secondly, properties continued to sell quickly. In fact, on average all properties sold in 11 days throughout the greater Toronto area, as compared to 15 days last year, a decline of almost 27 percent. In Toronto’s eastern trading areas the average days on market was only 10 days and even lower in the trading areas that encompass popular neighbourhoods such as Riverdale, Leslieville, and the Beaches.
Thirdly, properties not only sold quickly, but they continued to sell substantially above the list price. On average all properties in the greater Toronto area sold for 104 percent of their asking price. In the City of Toronto the sales- to-list ratio was even higher, with all sales coming in at 106 percent of their asking price. In May 2016 all properties in the City of Toronto sold at 105 percent of the asking price. Not one trading district in the entire City of Toronto saw sales on average less than 105 percent of the list price, with some districts reporting sales-to-list ratios of more than 110 percent.
Fourthly, average sale prices continue to rise. In May the average sale price came in at $863,910, an increase of almost 15 percent compared to May, 2016. In the City of Toronto detached property sales came in at $1,503,868 a 6.6 percent increase compared to last year. Similarly semi-detached properties increased by 27 percent to $1,062,318 and condominium apartments continued their increase in value to $564,808, an increase of almost 28 percent compared to a year ago.
A notable change was the pace of sales. Last May there were 12,790 reported sales for the greater Toronto area, an all-time record month for sales. This year reported sales of properties came in at 10,196, a decline of 20 percent. May marks the second consecutive month in which sales have decreased on a year-over-year basis.
The consensus is that the change in the market place will persist for a few months, perhaps into the fall or later, as buyer and seller expectations adjust. But as the Vancouver market demonstrated in May, governmental measures to cool that market and to bring a measure of affordability have failed. The Vancouver market cooled dramatically after the B.C. government announced legislation to curtail it, namely a foreign buyer tax, like the one announced for Toronto and Southern Ontario. But in May the Vancouver market was once again breaking records with an average sale price of $1,830,956 for detached properties, up 5 percent from the same month last year and just surpassing the previous high of $1,826,541 achieved in January 2016.
Expect the same scenario to play out in the Toronto residential resale market over the remainder of 2017 and into 2018.

Muskoka Real Estate Market Update – May 2017

The best way to sum up the Muskoka and area recreational marketplace at the end of May is as follows: the number of sales is increasing, while the volume of available inventory is decreasing. This is clearly not an ideal market scenario, particularly for hopeful buyers.

The story on the inventory side unfolds as follows. Generally, both for recreational and residential properties, the numbers are down. The Muskoka – Haliburton Association of Realtors reports that year to date it has processed 3,964 listings in Muskoka, Haliburton and Orillia. That compares to 4,365 during the same period last year, a decline of 10 percent. The decline in available recreational properties is even more severe.

At the end of May there were only 726 properties available for sale across the entire region. Last year there were 1,123, a staggering decline of 35 percent. At the end of May 2015 there were 1,348 recreational properties available for sale. The same is happening in the three major regions in which Chestnut Park is active.

In the Haliburton Highlands there were only 154 properties available for sale, a decline of 39 percent compared to the 253 that were listed for sale in 2016. In 2015 there were 337 recreational properties available for potential buyers to purchase. Supply in the Haliburton Highlands has dwindled by about 55 percent in two years.

Lake of Bays is following the pattern of the Haliburton Highlands. At the end of May listings of recreational properties were down to a mere 75, a sharp 30 percent decline compared to the 105 available last year. In 2015 there were 132 available properties.

Although there are more properties available on Muskoka’s big lakes, Lake Rosseau, Lake Joseph and Lake Muskoka, on a percentage basis the decline in available inventory is the same as that in Lake of Bays. At the end of May there were 273 properties listed for sale, a 30 percent decline compared to the 337 available last year. In 2015 there were 382 available recreational properties.

Notwithstanding these declines in available inventory, sales of recreational properties are on the rise in all regions. Over all the Association reports that 400 properties have been reported sold year-to-date. That represents an increase of almost 12 percent compared to the 359 properties sold in 2016. In 2015 only 278 recreational properties were reported sold at this time of year.

The region showing the greatest increase in sales year-over-year is Lake of Bays. Last year at this time a paltry 27 recreational properties had been reported sold. This year that number has jumped to 45, an increase of 66 percent.

Sales on Muskoka’s big lakes are also up. Last year 91 properties were reported sold. At the end of May 2017, that number has climbed to 108, an increase of almost 19 percent.

The only region showing a decline in sales is the Haliburton Highlands. I suspect that that decline is due to a supply shortage rather than a lack of buyer demand. It must be remembered that inventory decline in the Haliburton Highlands was greater than any other region. Last year 111 recreational properties were reported sold, this year only 101, a decline of approximately 10 percent.

A decline in supply in conjunction with rising sales usually means rising average sale prices. A look at sales and average sale prices for all reported sales on Muskoka’s big indicates that year-over-year prices are rising. In fact prices have been rising since 2010, with, of course, fluctuations on the various lakes depending on the volume of very high priced properties that have been reported sold.

In May the average sale price for all properties reported sold on Lake Rosseau, Lake Joseph, and Lake Muskoka was $2,139,214. Last year the average sale price for all recreational properties reported sold on the big lakes was $1,962,797. This represents a year-over-year increase of 9 percent. Compared to the average list price for all properties sold on the big lakes the sale-to-list ratio is approximately 95 percent, only slightly better than the 94 percent achieved in 2016.
Chestnut Park’s number year-to-date have been very strong, notwithstanding the dramatic decline in inventory. Chestnut Park continues to be the dominant brokerage in the Port Carling area, outdistancing the next nearest competitor office by more than 33 percent in dollar volume of reported sales. Chestnut Park’s sales representatives were responsible for approximately 27 percent of the dollar volume of all reported sales. Chestnut Park’s sales have totaled more than $98 Million to the end of May.

At this stage it is difficult to forecast how the latter half of 2017 will unfold. The Provincial Government announced measures to cool the red hot Toronto and area residential resale market on April 20, 2017. For the most part those measures do not apply to the Muskoka and area market, yet the psychological affect of those measures may in infiltrate the Muskoka market and cause and cause buyers to be more deliberate and patient. Most of the measures announced in April should have had no impact on the Toronto market – only 4 to 5 percent of all buyers were foreign buyers – yet the market in the greater Toronto area is o by approximately 20 percent year over year.

Toronto Real Estate Market Update – April 2017

The Toronto and area marketplace behaved uncharacteristically in April. For the first time in many years the number of sales this month was fewer than the number of sales reported in the corresponding month the year before. In April there were 11,630 sales of residential properties in the greater Toronto area, a 3.2 percent decline compared to the 12,016 sales that were reported last year. The immediate question is – has the Toronto resale market changed?

A lot happened in April. The most important development was the provincial government’s announcement that it would be promulgating legislation to help more people find affordable homes, increase supply, protect buyers and renters and bring stability to the real estate market. The most specific of these measures was the implementation of a 15 percent non-resident speculation tax on the price of homes in the Greater Golden Horseshoe area purchased by individuals who are not citizens or permanent residents of Canada or by foreign corporations, and the expansion of rent control to all private rental units in Ontario. Prior to the provincial announcement rental units in buildings built after 1991 were exempt. These two measures will take effect on April 21st and April 20th, respectively.
In April we also witnessed a dramatic increase in resale inventory. It was only a few months ago when inventory levels were 50 percent lower than they were a year ago. In just one month the negative variance was reversed. During the month, 21,630 new listings came to market, an increase of more than 33 percent compared to the 16,190 new properties that came to market in April 2016. At the end of the month there were 12,926 properties available to potential buyers, 3 percent more than the 12,554 available last year. It should be noted that even with the substantial number of new listings that came to market in April, supply levels are still historically low.
Notwithstanding the proposed affordable housing measures and the plethora of new listings that came to market, prices continued to rise, and sales continued to take place at lightning speed. In April, the average sale price for all property types in the greater Toronto area came in at $920,791, the highest average sale price on record, and almost 25 percent higher than the average sale price reported last year. In April 2016, the average sale price was only $739,762, interestingly, an all-time high record at that time.
The sales that took place did so at a record, blistering pace. All sales in the greater Toronto area took place in an unbelievable 9 days. Last year it took 15 days for all sales to take place which was a record for the month. Detached and semi-detached houses in the city of Toronto sold even faster. All detached properties sold in just 8 days. All semi-detached homes sold in 7 days. Even condominium apartments, historically selling slower than freehold properties, flew off the shelf in only 10 days.
Not only did all these property types, detached, semi-detached, and condominium apartments, sell at rapid speeds, but in every category, and at every price point, including the most expensive properties in Toronto’s central core, they sold for substantially more than their asking prices. There was not one housing type or trading area where the sale price was at or lower than the asking price. In many cases the average sales price exceeded the asking price by more than 120 percent.
Even though sales were slightly down (3.2 percent) year-over-year, the average sale price for every housing type was substantially higher. Detached properties in the city of Toronto came in at $1,578,542, up 25.2 percent. Semi-detached properties came in at $1,104,047, up by 22.4 percent, and condominium apartments came in at $578,280, up by almost 33 percent. In Toronto’s central core detached properties sold on average for $2,200,000 and semi-detached properties were not far off at $1,389,400.
So what does all this data, some of it conflicting, say about Toronto’s residential resale market? Clearly demand remains strong, and even though more properties came to market, inventory levels are still insufficient. If homeowners continue to bring properties to market at the pace and level that they did in April, supply levels might, for the first time in years, move towards a more balanced market. If that happens it will only be temporary. There simply isn’t enough supply to meet the growing demand in the greater Toronto area. With more than 100,000 net migration to the greater Toronto area annually, demand will remain high. Government legislation that was designed to curb urban sprawl has resulted in a sever shortage of low rise housing, forcing buyers into high rise condominiums at a pace that exceeds builders’ ability to deliver apartments to meet our housing needs.
The Ontario Fair Housing Plan measures, even if successful, are many years away from increasing the housing supply. The only economic change that will reduce demand is a substantial increase in mortgage interest rates. With the Canadian economy still struggling, that will not happen soon. And if it did, the newly expanded rent controls combined with the ongoing need for rental accommodation will be responsible for a rental housing crisis.
Consequently with perhaps a wait-and-see lull that the new measures announced by the provincial government will create, we should anticipate that the Toronto and area market will remain robust, with average sale prices rising until they reach a point that simply renders them unsustainable. Until then, it is an arrogant and politically motivated government position, that it can deliver or control affordable housing. Toronto is not the only city in the world that no longer meets the long cherished, yet unrealistically arbitrary figure of 3 times gross household incomes as a reasonable benchmark for affordable housing prices.
A review of housing prices in other parts of the world makes it clear that there is no particular reason why housing must be affordable for the average person. Residential real estate in many cities is even more expensive than Toronto. Simply stated, Toronto has moved into the category of one of the best cities in the world in which to live.
Infographic conclusion: The proposed provincial legislation and the large number of new listings that came to market in April will cause a temporary lull in the market. Sellers will have to modify their expectations. Sales will continue but more moderately, both in time and price.

Toronto Real Estate Market Update – March 2017

March residential resale numbers were staggering, in every category. More than 12,077 homes changed hands in March, up almost 18 percent compared to the 10,260 that were reported sold last year. In comparing 2017 against 2016 it must be remembered that 2016 smashed all records for residential resales.
The most daunting statistic emerging for March’s data is the average sale price for all properties sold. The cost of the average home in Toronto in March came in at $916,567, an eye-popping 33.2 percent higher than what the same home would have cost a buyer in March 2016. In absolute numbers a buyer looking to buy the same home he considered buying last year would now have to pay an almost impossible $228,000 more for the same property. Not only would that fictitious buyer have to pay substantially more, he would have to act quickly because all of the 12,077 properties that were reported sold in March were on the market for only 10 days (on average). Staggering is the only word for these year-over-year numbers.
Prices were even higher for detached and semi-detached properties. A detached home in the City of Toronto will now cost a buyer $1,561,780. A semi-detached home is not far behind, coming in at $1,089,605. In Toronto’s central districts the numbers are substantially higher. The average sale price for a detached property was $2,450,955, while a semi-detached property in Toronto’s central districts came in at $1,410,702. The 105 properties that sold in this category of homes in March sold in only 7 unbelievable days. Even condominium apartments in the central core of Toronto are beginning to reach lofty heights. The average sale price for condominium apartment sales in March was $615,880. Only a year ago their average sale price was only $484,000. And like their free-hold counterparts condominium apartments in March sold in only 11 days and at 108 percent of their asking price.
The greater Toronto area’s definition of what constitutes a luxury property may, at this pace, have to be augmented. In March, 632 properties were reported sold having a sale price of $2 Million or more. Once again the comparison to 2016 of properties sold in this category is staggering. Last year there were only 228 properties in this category, and in 2015 a mere 132.
The debate that is now consuming politicians, economists and real estate experts is all about the causes of this supercharged Toronto housing market. The real estate industry is strongly of the view that the problem can be distilled to one word – supply! March’s inventory numbers support this position. At the end of March there were 7,865 properties available to consumers to buy. That’s more than 35 percent fewer properties than were available to buyers in 2016. Although 17,051 new listings came to market in March, an increase of 15 percent compared to last year, the greater Toronto’s inventory levels remain perilously low.
Economists see Toronto’s real estate problems as being created and driven by demand. The frenzied demand, as it has been characterized, is being driven by, and in no particular order, foreign investors, primarily Asian, speculators, and local demand by those buyers who believe that if they don’t get into the market today they may never be able to do so. One shouldn’t forget mortgage interest rates. At only 2.65 percent (or lower) for a five year term, rates are at all time historical lows.
It is becoming clear that there will be political intervention, and it will be soon. At the time of preparation of this Report Ontario Premier Kathleen Wynne announced that the province intends to introduce a package of measures to address home affordability in Toronto. The following legislative tools are within the Province’s arsenal. It can impose a speculation tax on buyers who buy and flip properties within short periods of time, perhaps 2 to 4 years. This tax could apply to all properties or just non-principal residences. A tax on foreign buyers similar to that introduced in British Columbia in 2016, and/or develop a progressive property tax for foreign buyers requiring owners who own homes in Ontario but do not live or work in Canada to pay annual property tax surcharges. The Province could also prohibit non-residents of Canada from buying resale homes.
It is a certainty that the provincial government will expand rental controls. Currently rental properties built after 1991 are exempt from the rent controls embodied in the Residential Tenancies Act. But will provincial (or federal or municipal) intervention cool the Toronto housing market? Any regulatory intervention will, in the short term, cause the market to slow. Any legislation related to foreign buyers will deter some foreign buyers, perhaps deflecting them to other Canadian jurisdictions. Domestic buyers may also take a “wait and see” approach to the market. Ultimately, any measures taken by the provincial government will be temporary in nature and there is little likelihood that prices for homes in Toronto will decline.
The Toronto market place is being shaped by global factors as much as local factors such as supply and low mortgage interest rates. The world as we know it is shifting from being predominately rural to urban. Cities will continue to grow, and some more than others. The world is riddled with corruption and instability and uncertainty is at its highest level since 2007. In this environment of global uncertainty investors are less likely to invest speculatively. They will look to jurisdictions and locations where their investments will be safe and certain, even if their returns are minimal or even flat. Cross border capital is flowing into established, certain, and safe economies. The greater Toronto area satisfies all of the above-noted investor requirements. Combined with annual immigration of 100,000 people, Toronto and the politicians, economists and realtors who are constantly attempting to understand the current market, should anticipate that the residential resale market will continue to be driven by these geopolitical factors, notwithstanding government intervention.
The market continues to be plagued by unprecedented low inventory levels. These levels have driven average sale prices to record highs. The record level of price increases are likely to generate government intervention, similar to what occurred in British Columbia in 2016.

Toronto Real Estate Market Update – February 2017

The question that economists, journalist, politicians and realtors are all asking is: What’s happening to the Toronto real estate market? What they are discovering is that there are no easy answers to this question. What’s prompting the question is the most recent residential resale data for the month of February.

In February, there were 8,014 reported property sales, a 5.7 percent increase compared to the 7,583 sales that took place last February. The positive variance is not large, but considering that 2016 was a record breaking year, substantially so, a positive variance speaks to the strength of the market in 2017.
Sales in and of themselves are not one of the major concerns related to the market. It’s the available inventory that’s the problem. At the beginning of March there were only 5,400 active listings. This compares very unfavourably to the 10,902 properties available for sale last year at this time.
Even at 10,902 that was an insufficient number of properties for sale in the robust market of early 2016. The decline in inventory year-over-year is more than 50 percent. And it is not going to get better. In February, only 9,834 new properties came to market, a decline of 12.5 percent compared to the 11,234 properties that became available for sale during February of last year.
What these numbers mean is that for the greater Toronto area there is only 1 month of inventory, and for the City of Toronto, 1.2 months of inventory. These are unprecedented low inventory levels. By comparison only a year ago, there were 1.7 and 2.1 months of inventory, respectively available to buyers. To put these numbers into perspective, a balanced market is one in which there are between 3 to 4 months of inventory.
It comes as no surprise therefore that all listed properties are selling at the speed of light and for prices never seen before in the greater Toronto area and the City of Toronto. All properties listed for sale in February (on average) sold in just 13 days. Last year, which I repeat was a record breaking year, it took 21 days for all properties in the greater Toronto area to sell, more than 38 percent faster than last year.
But what has captured everyone’s attention is the sale prices that are being obtained in the greater Toronto area and the City of Toronto. Overall, for the entire region, including the 416 and 905 geographical areas, the average sale price for all properties sold in February was $875,983. That number represents a stunning increase of almost 28 percent in only one year. Last February the average sale price was only $685,735. If you were a buyer who decided to postpone purchasing a house in 2016 and now are in the market, the house you could have bought last year will now cost you $190,000 more.
Prices are substantially higher in the City of Toronto. A detached property now costs $1,573,622, a 30 percent increase compared to last year. A typical semi-detached property for the rst time now costs more than $1 Million ($1,085,484). In Toronto’s central districts the average sale price for a detached property is now an eye-popping $2,503,188. Unbelievably, last February the average sale price for detached properties in the central districts was only $1,869,749, an increase of $634,000 or 34 percent. In February there were 389 properties that were reported sold with a sale price of $2 Million or more. Last year there were only 187 sales in this price category and a mere 103 in 2015.
The one plentiful source of housing, namely condominium apartments, has all but disappeared. At the end of February there were only 1,301 active listings in the City of Toronto. In February 1,632 condominium apartment were reported sold. That’s 25 percent more sales than available listings. At that pace, you don’t have to be a mathematician to see the market wall that we are heading towards. By comparison only a year ago, there were 3,432 active condominium listings, a year-over-year decline of an incredible 62 percent.
So what is happening to the Toronto residential resale market? There is no easy answer to this question. It is a combination of factors that have come together to create the perfect real estate storm – imperfect if you are a buyer.
In no particular order, the following factors have come together to create the market place we are experiencing. Interest rates remain historically low, as they have for many years. Currently a buyer can secure a five-year fixed mortgage with an interest rate of only 2.69 percent. The long period of low interest rates has generated an insatiable appetite for debt. At the current low rates, and they have been lower, if you are a buyer why not take on all the debt you can. It’s cheap money, particularly when inflation is running at about 2 percent.
Because of Toronto’s strong economic environment, to a large extent driven by the real estate industry, particularly new construction, approximately 100,000 immigrants have been making their way to the greater Toronto area annually. That means 30,000 new households, perhaps more, require new shelter annually. That number begins to compound over time.
Historically low interest rates and an increasing population have driven demand to unprecedented levels. This level of frenzied demand has in turn and over time diminished the available inventory. As indicated above, at the beginning of March there were only 5,400 active listings available to buyers in the entire greater Toronto area, which is very large geographical swath. By way of random comparison, in March 2002 when Toronto’s population was substantially less than it is today, there were 15,524 active listings. That was fifteen years ago. Ten years ago, there were even more available listings as a result for the economic upheavals the banking industry was experiencing.
Foreign buyers have also entered greater Toronto’s market place, although their impact is less a factor than some journalists and economists believe it is. A recent study by the Toronto Real Estate Board indicates the foreign buyers are involved in less than 6 percent of all resale transactions. Moreover, and unlike Vancouver, foreign buyers in the greater Toronto area are not simply parking their money in Toronto real estate, leaving properties empty for extended periods of time. In one form or another foreign buyers tend to be end-users.
There is no easy solution to the problem plaguing the Toronto market place. Greater supply would help, but the lead time to delivering new properties to the market is at least 2 to 3 years. In order to facilitate this solution governments at the municipal and provincial level will have to deregulate the existing legislation, and free up land for development. What we don’t need is government intervention in the form of higher taxes or taxes targeted at specific buyers. That might slow the market, but it won’t bring prices down and the broader impact on the economy would be disastrous.

Toronto Real Estate Market Update – January 2017

The Toronto and area residential resale market picked up where 2016 ended. In fact it accelerated the pace of sales we witnessed in December. This is unusual behavior for the market in January, usually a slow month, as buyers and sellers kick out the holiday season cobwebs. But these are unusual times, very unusual times.


The shortage of available supply is causing buyers to hunt for properties for sale, even at the very beginning of the year. In January there were 5,188 reported sales, almost 12 percent higher than the 4,640 reported sales in January of 2016. January’s sales figures would have been higher if there were more active listings available to buyers. This is clearly demonstrated by the fact that in the City of Toronto there was a decline in the number of detached and semi-detached properties sold, while at the same time average sale prices increased by almost 27 percent for detached properties and more than 26 percent for semi-detached properties.
The other interesting piece of data that emerges from January’s results is the speed at which properties were listing for sale and then reported sold. In January all properties listed for sale (on average) sold in just 19 days. The number, when compared to January 2016, is startling. Last year it took 29 days for all properties to be reported sold, a speed-up in sales of almost 35 percent. It must not be forgotten that 2016 was a record breaking year in all categories, including days on market.
It is no surprise that with a listing shortage, fast sales, and a certain buying fervor that the average sale price for all homes sold in the greater Toronto area increased sharply in January. The average price for a home in the greater Toronto area was $770,745. That is not a record, but it was close. The record is $777,031 achieved in November of last year. Last January the average sale price was only $630,193, a dramatic increase of more than 22 percent. That increase included condominium apartment sales. Excluding condominium apartments the average price of a detached home is $1,336,640, and $902,688 for a semi-detached property, eye-popping increases of 26.8 and 26.4 percent from last year.
In Toronto’s central core the numbers are even higher. A detached house in the central core will now cost a buyer $2,324,593, with semi-detached properties now trading for $1,169,123, if you can find one. Only 33 semi-detached properties sold, again speaking to the shortage of supply, and they sold in only 13 days. Other trading areas in Toronto produced similar or even more shocking results. For example, all detached properties in Toronto’s Beach neighbourhood (there were only 6 of them) were placed on the market and reported sold in only 2 days! And at 114 percent of their asking price. These are unprecedented market performances.
The decline in the number of available condominium apartments for sale is also becoming troubling, especially since the bulk of all reported sales in Toronto in January were condominium apartments. In January the combined total of detached and semi-detached properties sold was a mere 584. By contrast there were 1,125 condominium apartment sales, an increase of almost 27 percent compared to last year. At the end of January there were only 1,387 active condominium apartment listings. Last year there were 3,231 condominium apartment listings, a shocking decline of 57 percent. We have reached the stage where there is just over one month of inventory of condominium apartments, and we are only in February. It appears that the last source of abundant housing, like detached and semi-detached properties, has dried up. It is not surprising that the average sale price of a condominium apartment jumped by more than 13 percent in January.
Inventory levels will dictate how the market unfolds for the remainder of 2017. At the beginning of February there were only 1.1 months of inventory in the greater Toronto area, and 1.3 months of inventory in the City of Toronto. The 1.3 months of inventory translates to only 2,230 properties available for sale. The market is far removed from a balanced market. We would need three times the current number of listings on the market to begin approaching a balanced market.
The market is clearly heading towards a state of paralysis. Sellers are holding o putting their properties on the market unless forced to, because there are few alternatives for them in the market place. The supply shortage continues to drive up prices – the average sale price in January was $770,000 – eventually taking them to unsustainable levels. Unless there is a change in the supply side, we could see the 2016 Vancouver pattern develop in the greater Toronto area.
Even without government intervention prices reached such exhibitant levels in Vancouver that by the middle of the 2016 sales began to decline. The decline was accelerated, of course, by the 15 percent foreign investor tax that was implemented in the fall. By year-end the average sale price of houses sold in the greater Vancouver area dropped by 6.6 percent compared to a year ago and sales tumbled by almost 40 percent. The average price for detached properties sold in the region tumbled to $1.5 Million last month, a 17.8 percent decline from the record high of $1.83 Million in January of 2016. The average price for a detached house in Toronto in January was $1,336,640, and $1,068,670 in the greater Toronto area.

Toronto Real Estate Market Update – December 2016

Another record-breaking year for the Toronto and area residential resale market. In 2016 113,133 properties were reported sold. This number shattered the previous record of 101,213 properties sold in 2015. That makes two consecutive years in which Toronto and area sales have exceeded 100,000. Prior to 2015 reported sales had not even come close to that number. The previous record was 93,193 properties sold. That was in 2007.


Although the most recent sales results seem remarkable, given Toronto’s population growth throughout the early years of this millennium, they should have been anticipated. The Toronto and area population has been growing by about 100,000 new immigrants annually. Households have been increasing by approximately 30,000 annually. Since 2007, when the then record of 93,193 sales was achieved, at least 300,000 new households have been created in the greater Toronto area. These households need shelter, a place to live, either as homeowners or as tenants. The supply of new housing in the greater Toronto area has not come close to meeting household needs. Consequently, almost everything that has become available for sale has sold, and as the supply dwindles, for higher and higher prices.
Even in December, which until the last few years has historically been a slow sales month, the resale data related to the market is startling. For example: in December, 526 detached properties were reported sold in Toronto, a decline of 7.6 percent compared to December 2015. The decline in semi-detached property sales is even more shocking. A decline of 11.5 percent, with only 138 properties reported sold. However where the surprise and related concern arise, is in the inventory levels available to buyers in these two categories of housing types moving to January 2017. In the case of detached properties only 488 active listings are available to buyers. In the case of semi-detached properties only 77. In both instances the number of properties available to buyers is less than the number of sales that occurred in December. Translated into months of inventory that would equate to 0.9 and 0.6 of inventory respectively.
The only housing type that showed a positive variance at year end was condominium apartments. Condominium apartment sales were up by 19.5 percent in December on a year-over-year basis. But even in this category, there are troubling signs of inventory shortages ahead. In December, in Toronto, 1,238 condominium apartments were reported sold. However, moving into January there are only 1,277 active listings for condominium apartments, or roughly one month of inventory.
Under these circumstances it is not surprising that average sale prices sky-rocketed in 2016. December’s average sale price came in at $730,472 or 20 percent higher than the year-over-year average sale price of 608,714. Can you imagine the shock that one would experience if they had lived abroad since 2014 and had returned to Toronto and were looking for a house or condominium apartment to buy. That same fictitious house they could have bought in 2014 for $566,000 now costs $730,000, an increase of 29 percent, and these numbers include condominium apartments.
In December the average price of a detached house was$1,286,605. The average price for a semi-detached house, if a buyer could find one for sale, was $808,920. In Toronto’s central districts the numbers are even more dramatic. The average price for a detached house came in at $2,058,876, while the average price for a semi-detached house broke the $1 million mark at $1,058,544, and this was in December.
Overall 5,338 properties were reported sold in December. This number would have been much higher had inventory levels been higher, a 8.6 percent increase compared to the 4,917 properties sold in December 2015. Across the greater Toronto area there are only 1.1 months of inventory, and in some of Toronto’s trading districts there are less than 1 month of inventory. For example two of Toronto’s eastern districts comprising Riverdale, Leslieville and the Beaches have only 0.7 months of inventory heading in 2017. Overall, across the greater Toronto area, we enter 2017 with 48.1 percent fewer active listings than we had last year. The actual numbers are eye- popping. We enter 2017 with a paltry 4,746 active listings of all property types. To put this number in context it must be remembered that there were 5,338 sales in December, 12 percent more sales than the total available inventory.
Based on the resale data available at the end of 2016, the beginning, and perhaps all of 2017, might be a different market than we witnessed in 2015 and 2016. We may witness negative variance sales numbers as compared to past years. This would be the first time this has occurred since 2008, when the equity markets imploded. The reason for this negative variance can be summed up in one word: supply.
With the supply side of housing being so low, it is inconceivable that sales can outpace 2016, notwithstanding the demand. Unless a plethora of new listings come to market in the early part of this year, and there is no current reason to believe that this will happen, year-over-year sales will decline, even though prices will continue to increase. This may result, in time, in the market stabilizing to some extent. Prices may reach levels that make affordability a problem which in turn may cause properties to remain on the market longer, thereby increasing the supply. Over the longer term that might result in price stabilization.
But where are those 100,000 new immigrants locating to the greater Toronto area annually going to live?

Toronto Real Estate Market Update – November 2016

The year is coming to an end, but there is no slowing down the Toronto resale market. The record for most sales in the greater Toronto area in any year has already been shattered, and there is still the month of December. The 8,547 sales reported in November took the total year-to-date sales to 107,840, breaking the previous annual record of 101,212 achieved only last year. In all likelihood there should be about 5000 (or slightly more) sales in December. That will bring the year-end total to approximately 113,000 reported residential resales, a truly remarkable feat. Ten years ago, there were only 83,084 reported sales in the greater Toronto area.


This record speaks to the two prominent characteristics of the greater Toronto area market. Firstly, the deep seated desire for home ownership, and secondly, the rapidly growing population of the area. With approximately 100,000 people immigrating to the Toronto area annually it is very unlikely that much will change in 2017, subject of course to any dramatic increase in mortgage interest rates.
Total annual sales was not the only new record set in November. The average sale price for all sales in the greater Toronto area came in at $776,684. The previous monthly record was set in October at $762,525. It should be noted that monthly average sale price records being set so late in the year is an anomaly. Historically the market reaches its monthly peak in May or June, and thereafter average monthly sale prices begin to decline. For example in May of last year the average sale price came in at $649,648. That was a record. No month following last May came close to eclipsing that record. A new record wasn’t set until February of this year with an average sale price of $685,738. February’s record has been shattered six times since then, the most recent record being achieved in November. Early data indicates that the Toronto and area marketplace might even establish a new record in December, until recently an unthinkable occurrence.
A third record establish in November was the average days on market that it took properties to sell in the greater Toronto area. It took only 17 days for all properties (on average) to sell. By comparison it took 26 days last year, an accelerated pace of almost 35 percent. In the City of Toronto it took only 15 days for detached homes to sell, and only 11 days for semi-detached properties to be snapped up by buyers.
The average sale price for detached properties in the City of Toronto is now $1,345,962, and for a semi-detached house you must be prepared to pay $906,353. It must be unthinkable to be a buyer who for whatever reason was going to buy a year ago and then did not proceed. That mythical buyer could have bought that same detached house for just over $1,000,000, and that same semi-detached house for approximately $840,000 last year. The percentage change year-over-year is 32 and 20 percent respectively.
As has been set out in previous market reports, the only affordable housing options for buyers are condominium apartments, but even this housing form is becoming pricey. In November the average sale price for condominium apartments in the central core of the city, where most condominiums are located, came at $526,116. This represents a 13 per cent increase compared to the average price last year. The volume of condominium apartment sales has also increased dramatically. Sales were up by almost 28 percent compared to last year. What is becoming worrisome is the rapidly declining volume of available listings of condominiums apartments. At month end in the City of Toronto there were only 2,002 condominium apartments for sale. When one considers that there were 1,718 condominium apartment sales in the same month, you don’t need to know any form of high mathematics to concluded that we will be out of stock of condominium apartments for sale if this pace of sales continues and it no doubt will, considering that condominium apartments are still (comparatively) affordable. It should be noted that at the other end of the condominium apartment spectrum, 14 condominium apartments sold in November having a sale price that exceeded $2 Million.
The supply shortage is not restricted to condominium apartments, but is impacting the overall marketplace. In November the total number of active listings available to buyers was almost 36 percent less than last year at this time. In actual numbers this amounts to only 8,639 properties, or only 1.2 months of inventory. This will be a hot point affecting the residential resale market in the early months of 2017.