Collingwood Real Estate Market Update – April 2014

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

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

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

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

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

Toronto Real Estate Market Update – February 2014

The story of Toronto’s resale housing market is straight forward yet troublesome. There are simply not enough properties on the market to meet demand, and as a result, average prices continue to rise. These rapidly rising prices are beginning to cause observers of the Toronto resale market to express concern. The Deutsche Bank (the most skeptical), the International Monetary Fund, and the Organization for Economic Co-operation and Development are amongst the various institutions expressing concern that Toronto’s resale market is overvalued. Various economists, including Nouriel Roubini and Ed Devlin of the bond giant Pacific Investment Management Company, have also stepped in, announcing that there is a lot of “frothiness” in the Toronto market. Except for the Deutsche Bank no one sees the market approaching bubble territory, but all are predicting a meaningful correction of some degree.

The data is beginning to speak quite eloquently. Notwithstanding an extreme winter month, February produced 5,731 resale transactions in the greater Toronto area, 2.1 percent more than the 5,613 reported sales in February 2013. In the City of Toronto condominium apartments accounted for half of all reported sales. Sales of other housing types were down as compared to February last year. They were down because there was an insufficient number of available detached, semi-detached and town houses to meet the demand. Detached were off by 8 percent, semi-detached by 11.8 percent, and townhouses by 8.8 percent. Condominium apartment sales were up by 9.6 percent. Of the 2136 reported sales for the City of Toronto, 1031 were condominium apartments.

Insufficient inventory continues to plague the market place. In February 10,897 properties became available for sale in the greater Toronto market place, 1 percent less than the 11,005 that became available last year. This decline, albeit moderate, contributed to the dwindling portfolio of the active listings. At the beginning of March there were 14,019 properties available for sale, more than 12 percent less than the 15,969 properties available to buyers in 2013. This lack of inventory is what is fueling the market, causing buyers to compete for favourable properties, and in the process driving average prices higher. At the beginning of March there were only 2.5 months of inventory for the entire greater Toronto area. A balanced market is not achieved until there are 4 months of inventory.

In January the average sale price for all properties sold came in at an alarming 9.2 percent. There was little abatement in rising average sale prices in February. February’s sales produced an average sale price of $ 553,193. This was 8.6 percent higher than last year’s average sale price of $ 509,396. By housing type, the increase in average sale prices was even more dramatic. Detached homes in the City of Toronto increased by 15.7 percent to $ 995,314; semi-detached moderately increased by 8 percent to $ 668,298, a small increase due to a lack of supply; and townhouses increased by a startling 20.7 percent to $ 545,043. The overall average was brought lower by condominium apartment sales, which only increased by 6 percent to $ 372,628. The most expensive neighbourhoods in Toronto are located in the central core. The average price for a detached property in Toronto’s central core came in at $ 1,425,485. Semi-detached houses on average cost $924,496 in the central core. Notwithstanding these lofty prices, all detached houses listed in February (on average) sold in just 19 days, and all semi-detached houses sold in an eye-popping 9 days, and for 109 percent of the asking price.

The most active trading area in Toronto is the eastern districts, and in particular for detached properties. Every district in the eastern trading area reported sales that met or exceeded the asking price, and in some cases by astonishing numbers. For example, sales in the eastern neighbourhoods known as Riverdale and Leslieville, saw the reported sale price exceed the asking price by 12 percent for all properties sold. Not only that, but all these properties took only 9 days to sell and be reported sold.

The slowest housing sector remains condominium apartments. Whereas all other property types were selling in 26 days or less, in the City of Toronto it took condominium apartments 34 days on average to sell. Reported sale prices for condominium apartments were not as frothy as the sale prices of other housing types. On average sale prices came in at only 98 percent of asking price. The average sale price for central Toronto condominium apartments (where most are located) was $ 419,663, a lot less than the average sale price of detached and semi-detached homes. Surprisingly there are still condominium apartments for sale (in the far eastern districts) that are priced at less than $ 200,000.

Looking forward little change can be expected in March. Expect more inventory shortages driving prices higher, while fraying the nerves of buyers desperate to buy properties while interest rates remain at historically low levels. Low mortgage interest rates continue to fuel the inventory short market. With five year rates available as low as 2.99 percent, how can a buyer not be motivated to purchase a property?

Collingwood Real Estate Market Update – February 2014

Extreme weather and the unseasonably frosty temperatures appear to have had an influence on the Georgian Triangle real estate market as well as so many other aspects of life in the area, and the province generally for that matter. Travel conditions were often hazardous, and many properties remained snowbound affecting access and the ability of potential buyers to fully appreciate the outdoor components and landscape of properties, to say nothing of the willingness of property hunters to venture out into the winter storms to view listings and keep their scheduled appointments. It is difficult to pinpoint and quantify the impact of any one factor on market trends, but property sales did continue to lag behind last year’s pace, which was compounded in part by a lower inventory of available properties.

With the publication of the Southern Georgian Bay Association of REALTORS® (“SGBAR”) February MLS® Statistic Report for the Georgian Triangle month over month improvement in the market was evident with 122 sales as compared to 83 the month previous, consistent with seasonal trends. Despite narrowing the substantial negative differential of 27% year over year in the month of January, however, February sales still came in 3% behind last year for the month when 126 sales were reported. Year to date figures therefore remain 14% behind last year’s pace when 239 sales had been logged compared to only 205 this year.

Despite the “polar vortex”, sellers were able to bring out 428 new properties on the market which was 6% more than last year when only 405 new listings were recorded. That was not enough, however, to make up for last month’s shortfall in new supply. Year to date figures for new listings amounted to 918. That remains 6% behind last year’s numbers of 975 at this time. Nor did it make any dent in the limited inventory of properties for sale in the area which continues to trail 2013 figures. At the time of the creation of the SGBAR report there were 1851 active listings on the market which is 13% fewer than last year at this time when 2128 properties were recorded as being on the market. The lack of supply inevitably limits the choice available to potential buyers looking in the area which plays out as a further depressant to market activity and volume of sales.

Limited availability, however, also means buyers are fighting over fewer properties and that tends to put upward pressure on prices. Year to date, the average residential sale price has gone up over 8% coming in at $391,311 compared to $361,487 at the end of February 2013. The year over year comparison of the average sale price for single family residential properties for the month of February is even more significant coming in a whopping 15% higher than last year’s figures for the month, breaking the $400,000 mark at $404,588 compared to $352,100 last year. Measured over a longer twelve month period the annual increase is a more sustainable 3.5% ($335,421 compared to $323,846). Whether the surge in average sale price recorded in February is an anomaly explained by the particular composition of properties sold in the month with a higher concentration of high end sales, or is a broader phenomenon of recovering prices due to basic supply and demand forces remains to be seen, but certainly affordability will be adversely affected if these sorts of price increases continue at the pace recorded this month.

Generally speaking, the market remains on firm ground despite the deep freeze. Moreover, interest rates show no sign of any significant uptick within the foreseeable future, moderating the negative influence of rising prices on affordability. While signs of general economic recovery persist, continuing sluggishness in job and income growth remain sticking points to a broader more robust economic picture with lasting traction and qualitatively transformative benefits to the real estate market.

Toronto Real Estate Market Update – December 2013 Year End Summary

There were no surprises in the data related to the Toronto residential market for the last month of 2013. Since the late spring the Toronto market has been very robust, outpacing comparative months in 2012. December was no exception, with 4,078 residential properties reported sold, almost 14 percent higher than the 3,582 properties reported sold in December 2012. Also as in previous months, the average sale price was up sharply at $520,398, almost 9 percent higher than the average sale price of $477,756 at the end of 2012.

Increases in average sale prices were particularly high in the case of detached and semi-detached Toronto homes. In December detached homes saw average sale prices rise by 18.9 percent to $864,351, and semi-detached prices rose to $ 644,423, an increase of 15.9 percent. The overall average sale price increase was tempered by an increase of only 7.6 percent in the case of condominium apartments. Having said that condominium apartment sales increase by almost 21 percent in December, while detached property sales declined by 6.7 percent, and semi-detached properties increased by only 8.8 percent. These disjointed numbers point, of course, to a supply problem. At the end of 2013 there were only 11, 418 properties for sale in the greater Toronto area. This compares vary unfavourably with the 13,241 at the end of 2012, almost 14 percent fewer properties available for sale year over year.

By year end the greater Toronto area compiled sales of 87,111 residential properties. In 2012 only 85,496 homes were reported sold. Although this only represents an increase of about 2 percent, 2013’s results came in as the fourth best year in the history of Toronto and area sales. The record for sales remains 2007 at 93,193 reported sales, followed by 2011 (89,096), 2009 (87,308) and now 2013. This year’s results were only marginally less than the third best year on record.

The consensus is that 2014 is likely to resemble the results of the 2013 resale market. Prices are expected to increase less robustly than in 2013, registering an equal or slightly higher number of sales in 2014 as compared to 2013. There are some potential problems for the market going forward. The above-noted levels of availability of resale houses for sale are exceptionally low. Currently the months of available inventory are only 2.5 months for the greater Toronto area, and only 2.6 months for the City of Toronto. Toronto’s eastern trading areas have eye-popping inventory levels of less than 2 months, not nearly enough to accommodate buyers’ demand. Unfortunately these low inventory levels are having a direct impact on average prices. Low inventories are resulting in multiple bids for available properties causing prices to rise at alarming rates – i.e detached and semi-detached home prices rose by 18.9 and 15.9 percent respectively in December.

If you are a Toronto area home owner these increases are psychological pleasing, but the negative side is that they are moving house prices to levels that are inconsistent with average household incomes. In 2013 average household incomes increased by 2.4 percent, substantially less than average house prices. So what has been sustaining the robust Toronto resale market? Simply, mortgage interest rates. Notwithstanding an increase the summer of 2013, mortgage interest rates continue to hover near historical lows. Toronto and area homes remain affordable because of the current mortgage interest rates. An increase in rates, particularly a sizeable increase of more than 1 percentage point, would significantly impact the market. The good news is that rates are not expected to rise.

Based on the performance of the Canadian economy and the signals being sent by the Bank of Canada, the earliest rates are expected to rise is in the latter half of 2014, and perhaps not until 2015. Notwithstanding the U.S Federal Reserve’s decision to reduce quantative easing (by buying fewer bonds each month going forward) the latest employment numbers do not indicate that either the American or Canadian economies are strong. In December Canada lost 45,900 jobs, increasing the jobless rate to 7.2 percent, and the U.S saw an increase of only 74,000 new jobs. That being the case, do not expect mortgage interest rates to rise. However even these low interest rates can support a market with rapidly rising sale prices for only so long without a corresponding increase in household incomes. That is not going to happen.

So from this corner we anticipate a very strong market for the first half of the year, clearly out pacing last year over the same period. The second half should moderate as prices continue to rise and the threat of increased mortgage interest rates becomes more likely. Sales between 85 – 87,000 are likely – not because of demand, but rather availability – and with a year-end average price coming in at approximately $ 540,000 or 3.5 percent higher than the $ 523,036 achieved in 2013.

Toronto Real Estate Market Update October 2013

October marked the fifth consecutive month in which reported sales of residential properties have outpaced the same month in 2013. Since June the greater Toronto market place has produced 31,049 property sales. During the same period last year only 25,987 properties were reported sold. This represents an increase of over 5000 property sales or 19.2 percent. October’s results were a carbon copy of this 4 month period. 8000 properties were reported sold. An increase of 19.2 percent compared to the 6,713 properties reported sold in October 2012. October’s results clearly have dispelled any notion that the recent increase in sales activity in the greater Toronto area was an aberration.

Previous market updates posited that the recent increase in sales activity may have been due to a perceived fear that mortgage interest rates were climbing higher. Increases in interest rates combined with the rising average sale price for Toronto properties would make home ownership unaffordable for a large number of potential buyers, in particular first time buyers. During the month of October mortgage interest rates actually came down. Five year fixed rates at 3.49 percent are now available. Since rates are not now anticipated to increase anytime soon, Toronto’s strong resale market is not likely to abate and will continue into 2014. The increasing cost of purchasing a house in Toronto and perhaps the intervention of the Federal Minister of Finance are the only factors likely to curb the current strong market.

Adding to these strong market conditions is the lack of available properties for sale. In October 13,110 new listings were delivered to the resale market place. This is a decline of 4.2 percent compared to the 13,685 delivered in 2012. Heading into November only 18,557 properties were available to buyers in the greater Toronto area. Last year there were 20,737, a decline of 10.5 percent. Interestingly sales of semi-detached homes declined by 2.4 percent in the Toronto market place. This decline was not due to demand, but to supply. This is reflected by the fact that in October the average sale price for semi-detached house sales in Toronto increased by 11.7 percent, almost the equivalent of the increase in the average sale price of detached homes (12.4 percent).

May of this year established the highest average sold price in the greater Toronto area at $ 540,544. October came very close to matching that achievement. The average sale price for all properties sold was $539,058, a 7.4 percent increase compared to the average sale price of $502,127 produced in October 2012. The average sale price for detached homes in the City of Toronto came in at $873,509. Semi-detached homes were a little less expensive at $642,112. Unfortunately there is not much supply for buyers to choose in the case of semi-detached homes. In Toronto’s central core area the cost of a detached house was $1,369,135, this is slightly off from the $1,397,683 it cost to by a similar type house in September.

Generally high end, luxury home sales (properties having a sale price of $ 1 Million or more) continued the improvement witnessed in September. In October 550 properties were reported sold in this category. This compares very favourably to the 378 sold in October 2012, and the 371 sold in October 2011. An increase of approximately 50 percent. 90 of these high end sales exceeded $ 2 Million. 8 of these 90 reported sales were condominium apartments, the rest were detached homes. No semi-detached property sales exceeded $ 2 Million.

Condominium apartment sales have continued to do well in the second half of 2013. In October condominium apartment sales exceeded the results of the overall market. Sales increased by 20.4 percent in the City of Toronto compared to last year. The increase in sales was accompanied by an increase in average sale prices. In October the average sale price of a condominium apartment was $ 384,441, an increase of 7.2 percent. Notwithstanding the improvement in condominium sales, they still take longer to sell than other types of properties, averaging 33 days in the in the City of Toronto. Overall sales in the greater Toronto market place (including condominium apartments) were achieved in 27 days. Sales were much faster for various housing types and various areas of the City. For example sales of semi-detached homes in the eastern trading districts took place in only 13 days. Sales of these types of homes were even faster in the central districts, coming in at an astounding 12 days. Condominium apartment sales brought the overall average for days-on-market to 27 days.

Looking forward more of the same can be expected in November and December, with of course, the seasonal adjustment coming to play. There is simply no economic change that is anticipated that might cause the current market conditions to change.

Prepared by Chris Kapches, Chestnut Park Real Estate Limited, Brokerage

Toronto Real Estate Market Update September 2013

Since June the Toronto residential resale market place has outpaced sales achieved in the same month in 2012. September was no exception. September’s performance was very strong. 7,411 sales were reported for the month, far out-distancing the 5,687 sales reported in September 2012. This represents a 30 per cent increase. August’s increase, compared to August 2012, was 22 per cent.

These strong numbers are no doubt being driven by consumer concern over increasing mortgage interest rates. In the last few months rates have increased by more than 30 per cent. The fear is that rates will continue to rise throughout 2013 and into 2014. The strong performance by the Toronto area market place in part is an indication of buyers making buying decisions today that would otherwise have been made in 2014.

All property types showed very strong agains compared to the same period in 2012. In the City of Toronto detached home sales were up by 31.7 per cent, semi-detached by 13.3 per cent, townhomes by 18.3 per cent, and condominium apartments by 31.5 per cent. Similar data emerges from the 905 trading area.

It is not surprising that the average sale price continued to rise in September. The average sale price for all properties sold in the greater Toronto area was $533,797, an increase of 6.5 per cent compared to September 2012’s average sale price of $501,326. In the City of Toronto the average sale price was even higher, coming in at $571,410. Last year it was $547,901. Detached and semi-detached homes in the City of Toronto are the most expensive housing types. The average price for a detached house was $856,169 in September. Semi-detached homes were less expensive, but still pricey at $616,049. It is not surprising to see buyers rushing to take advantage of still low interest rates. Five year fixed mortgages are still available at 3.69 per cent, and in some instances as low as 3.59 per cent. The most expensive homes in Toronto are detached properties located in the central core of the city. The average price for a detached home in the central core was $1,397,683. Last September the same property sold for $1,224,940, an increase of more than 14 per cent.

Not only were a lot of sales achieved in September at higher average sale prices, but properties sold in very fast order. All properties (on average) that came to market in September in the entire greater Toronto area sold in 27 days, 2 day faster than last year. The speed of sales was even faster depending on housing type and location. Detached homes coming to market in September in the City of Toronto sold in 22 days. Semi-detached homes sold in an eye-popping 14 days. In Toronto’s central core they sold in only 11 days. This pace verges on frenzy. Only condominium apartment sales lagged behind other housing types. Condominium apartments took 36 days to sell, more than 30 per cent longer than the overall market pace. This pace is identical to the rate at which condominium apartments sold in September 2012.

Buy or Sell First?

Good question. Unfortunately, like with many good questions, there is no one clear answer. The answer really is: it depends. It depends on your personal preference, the type of home you are selling, the type of home you are buying and the current market conditions.

Option 1) Selling first (preferably with a long closing) and then buying, mitigates the risk of carrying two properties at the same time. But putting your home up for sale before having found your new home can provide uncertainty. What if you cannot find a home you like? If you are looking for an unusual home, this is not practical and you may find yourself leasing in the interim.

However, if you are clear on the type of home, the neighborhood, the price AND you find several places that meet your criteria, then putting your home up for sale first may be your option.

Option 2) Buying first, especially if you are looking for a unique property, can make the most sense. But keep in mind, if you are unable to sell your existing home within the closing period, you may be left carrying the cost of two properties. Bridge financing is available, but the term may be limited.

This option ensures you buy the home you love, but keep in mind, a unique property will be in high demand, so buying conditionally on the sale of your home may not be an option. Are you willing to buy firm (no conditions)?

As you can see, there is merit to both options. You may even find yourself selling first this time and buying first next time. Really…it just depends…

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

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

What is a Condominium?

A “condominium” refers to a form of
legal ownership, as opposed to a style of
construction. Condominiums are most often
thought of as high-rise residential buildings,
but this form of ownership can also apply to
townhouse complexes, individual houses and
low-rise residential buildings. Condominiums
are also known as strata in British Columbia
or syndicates of co-ownership in Quebec.
Condominiums consist of two parts. The first
part is a collection of private dwellings called
“units.” Each unit is owned by and registered
in the name of the purchaser of the unit.
The second part consists of the common
elements of the building that may include
lobbies, hallways, elevators, recreational
facilities, walkways, gardens, etc. Common
elements may also include structural elements
and mechanical and electrical services.
The ownership of these common elements
is shared amongst the individual unit owners,
as is the cost for their operation, maintenance
and ongoing replacement.
Each unit owner has an undivided interest
in the common elements of the building.
This ownership interest is often referred to
as a “unit factor.” The unit factor for any
particular unit will generally be calculated in
proportion to the value that the unit has in
relation to the total value of all of the units
in the condominium corporation. The unit
factor will tell you what your ownership
percentage is in the common elements and
will be used in calculating the monthly fees
that you must pay towards their upkeep and
renewal.
The creation of a condominium is regulated
by provincial or territorial condominium
legislation and municipal guidelines. It can
be created in many different ways. In some
provinces, a developer, or other interested
parties, may register a declaration to create a
condominium, while in others, an application
may be made to have title issued for the
units pursuant to an “approved plan
of condominium.” The operation of
condominiums is also governed by provincial
or territorial legislation and the condominium
corporation’s own declaration, bylaws and
rules.
Once a condominium corporation has been
established, a board of directors, elected by,
and generally made up of, the individual
condominium owners, takes responsibility for
the management of the corporation’s business
affairs. There is usually a turnover meeting
where this transfer of responsibility takes
place. Each unit owner has voting rights at
meetings. Your voting rights will generally
be in proportion to your unit factor.

All above material extracted from Canadian Mortgage and Housing Corporation. For more information please visit www.cmhc.ca