Muskoka Real Estate Market Update – Spring 2014

For the second year in a row the recreational market has been negatively impacted by weather conditions. Winter has been long and hard, not only making access to cottage properties almost impossible, but creating an atmosphere not condusive to buying a recreational property. Cottages are associated with warm, sunny days, welcoming lakes, and motor and sail boats on the horizon. With snow drifts often taller than cottages, and frigid temperatures, those summer visions evaporated. There may not have been the high water issues that we experienced last year, but conditions were sufficiently challenging to keep sellers from considering listing their properties for sale.

The decline in inventory in the first four months of 2014 is quite striking, a pattern that might be a reflection of broader market trends. During the first third of the year the Muskoka Haliburton Association of Realtors reported processing 3,097 properties for sale. This compared to 3,235 properties for sale during the same period in 2013 and 3,664 in 2012, declines of 4.3 and 15 percent respectively. This pattern repeated for recreational properties.

In the Haliburton region inventory of recreational properties has declined from 295 available properties in 2012, to 236 in 2013 and down to only 173 this year. These declines amount to 26 percent since 2013 and 41 percent since 2012. The declines on Lake of Bays are similar but not as dramatic. There were 109 recreational properties available for sale in 2012, 100 in 2013, and 92 this year, declines of 8.2 percent and 15.6 percent. The situation on the Muskoka Lakes, Lake Rosseau, Lake Joseph, and Lake Muskoka is not dissimilar. There were 243 active available listing of recreational properties in 2012, 232 last year and only 200 this year, declines of 4.5 and 17.7 percent. The Association reported only 760 recreational properties for all Association trading districts combined, down from 1,025 in 2012 and 867 last year. The decline from 2012 is more than 25 percent.

Anecdotally these declines can be explained by the severe weather conditions experienced in 2013 and this year. But this explanation sheds no light on why inventory levels have decreased so dramatically from last year, when weather conditions were equally as inhospitable as they were during the first four months of this year. It may be too early to tell, but demographics may be playing a role in these statistics. As the population ages and becomes more settled there may be fewer potential sellers. It will be interesting to see how this data unfolds during the remainder of the year.

Sold recreational properties have also declined since 2012. Weather conditions have clearly had an impact on the number of properties sold. In the Haliburton area sales have declined from 35 to 28 in 2012 and 2013 to 25 in the first four months of this year. On Lake of Bays from 20 to 15 to 10. The only recreational trading district to reverse this trend is the Muskoka Lakes. In 2012 there were 25 reported sales. Last year reported sales dropped to 18, but this year, notwithstanding the weather conditions, sales have increased to 23, an increase of 27 percent. It is not surprising that with fewer properties available for sale, and inhospitable weather conditions, that sales have declined.

Because of the divergent nature of cottage properties, prices are affected by such features as location (a particular lake), exposure, elevation, water depths and boat traffic. As a result determining average sale price trends becomes more challenging than in an urban environment where numerous sales of comparable properties allow for a fairly accurate reflection of current market values. Moreover sales take place at a much more rapid pace. For example in the Toronto housing market, in April average days on a market for all properties sold were only 20 days. A review of sales that took place in March as reported by the Association indicated that median prices have declined by approximately 8 percent compared to March 2013. As I have indicated in previous reports, a market analysis of the first four months of recreation property sales is not productive since the market is normally dormant during this period. However what this early data indicates is that caution should be exercised in pricing. Sellers must be mindful that the recreational market is not the robust Toronto resale market, where multiple bids on properties are common. Recreational properties will sell, and they will do so quickly, if priced realistically.

Toronto Real Estate Market Update – April 2014

The Toronto residential resale market continued a string of strong monthly performances in April, a trend that defines the spring market: low inventories, strong sales and rising average sale prices. Mortgage interest rates remain king. Historically low with no likelihood of an increase for the remainder of this year. As this market update was being prepared Laurentian Bank was offering a three year rate of just under 2 per cent, the lowest mortgage rate ever offered in Canadian history.

In April 9,706 residential resale properties were purchased, many by buyers eager to take advantage of the exceptional low rates. This compares with 9,535 sold last year, an increase of 1.8 per cent. The number of properties sold would have been much higher had there been more properties available for buyers to purchase. Most of the sales were in Toronto’s 905 region. In fact 60 per cent of all sales were in the 905 region, with only 3,544 in the actual City of Toronto. There are two obvious reasons for this trend. Property values are less in the 905 region, and buyers only pay one land transfer tax. With the average sale price steadily rising, the additional land transfer tax charged by the City of Toronto adds many thousands of dollars to the purchase of a home. A misguided tax that should be reconsidered.

In April the average sale price for all residential properties sold in the greater Toronto area came in at $577,898, the highest average monthly sale price ever recorded. In the City of Toronto the average sale price was more than 10 per cent higher at $641,666.00. Average sale prices for detached and semi-detached properties in Toronto also reached record levels. The average sale price for detached homes increased by 13.2 percent in April (as compared to last year) and the average price of semi-detached homes sky rocketed by 18 percent. Detached homes in Toronto now sell for $965,670 and semi-detached homes sell for $702,332. The most expensive neighborhoods for buying a home are in Toronto’s central district. The average price of a detached home in Toronto’s central districts comes in at an eye-popping $1,506,782. Semi-detached properties were not far behind at $942,267.

April’s average sale prices not only produced record numbers but they did so in record breaking speed. All properties in Toronto and the 905 region sold in only 20 days on average. Last year it took 23 days for all properties to sell. Within various neighborhoods the speed of sales was even faster. For example, in Toronto’s eastern region all detached homes sold in a remarkable 10 days. Not only were sales fast, but all on average sold for 104 per cent of their asking price. Although not as quickly, but still remarkable, all detached homes in the central district sold in 17 days, and for 100 per cent of their list price. It must be reiterated that the average sale price of these homes was $1,506,782.

Condominium apartments remain the most accessible housing type for Toronto buyers. In the City of Toronto alone 1,505 condominium apartments were sold in April, 3.2 percent more than last April. Prices, however, did not reflect what is occurring with detached and semi-detached housing sales. The average price of condominium apartments rose moderately by 1.8 percent to $384,758, still an affordable housing alternative, and probably the only choice available to first time buyers. More than 63 percent of all condominium apartment sales took place in Toronto’s central neighborhoods, predominately downtown.

April saw a considerable spike in high end property sales, properties having a sale price in excess of $1 Million. These amounted to more than 8 percent of the total sales for the month of April. 828 sales were reported in this category. Last year there were only 606, a 36 percent increase. More surprisingly were the number of properties sold achieving a sale price of more than $2 Million. 135 of these properties traded hands in April. Last April only 98 properties in this price range found new buyers, a year-over-year increase of almost 38 percent.

One of the factors driving this robust market is inventory levels. The greater Toronto area reported only 2.5 months of inventory. Some trading areas were in even greater need of new listings. Toronto’s eastern, and still less expensive districts, reported only 1.7 months of inventory. The number of new listings coming to market is not encouraging.

In April 17,351 new properties came to market, 4.5 percent less than in April 2013 (18,160). As we enter May, there are only 19,118 properties available for buyers to consider as compared to 20,866 last year at this time, 8.4 percent less choice. This is a difficult market for buyers. Limited choice, and competition for what is available. There is nothing that points to a change to this environment anytime soon.

Toronto Real Estate Market Update – March 2014

There were few surprises in the residential resale data that emerged for March sales in the greater Toronto area. The trend continues. Low inventories of available property’s are driving sales and average sale prices, fueled by historically low mortgage interest rates. Rates might even get lower before they start to rise. At the end of March the Bank of Montreal made available a five year mortgage with an interest rate of only at 2.99 percent. Since mortgage interest returns are the banks’ primary source of revenue, increasing competition amongst banks, and no doubt lower rates over the short term, can be anticipated. This is no doubt good news for Sellers who find themselves with multiple bidders for their properties, all hoping to purchase a property before mortgage interest rates begin to rise.

In March 8,081 residential properties traded hands, an increase of more than 7 percent compared to 7,537 sales reported in March 2013. The bulk of these sales took place in the 905 region. Of the 8,081 reported sales, 5,103 took place in Halton, Peel, York, Durham, Dufferin and Simcoe County, This is not surprising considering that consumers have more choice in the 905 region, and prices remain lower than comparable properties, if you can find them, in the City of Toronto. Although the gap is declining, the average price for a detached house is $254,000 less in the 905 region –and the buyer pays only one land transfer tax- than in the city of Toronto. Semi-detached homes are $222,000 less expensive.

As has been reiterated in many of the last Market Reports, inventories remain a problem. At the end of March there were only 16,543 available properties in the greater Toronto area for buyers to choose, 10 percent fewer than the 18,384 available at the end of March 2013. A positive turn in March was the number of new listings that came to market. This March 14, 829 new properties were listed by realtors in the greater Toronto area. Although only 1.4 percent higher than the 14,618 that came to market in 2013, it represents the first year over year increase that the market has witnessed in a number of months. One month does not create a trend, but it may be that sellers sitting on the metaphorical real estate fence are coming to market in order to capitalize on the surging average resale prices.

In March the average resale price came in at $557,684, a record for Toronto, surpassing the previous record for a single month achieved only last month. February’s average sale price came in at $552,885. March’s average sale price was almost 8 percent higher than the average sale price achieved in March 2013. Increases were consistent across all housing types. Detached homes in Toronto increased by 6.8 percent, semi- detached by 8.7 percent, townhouses by 7.7 percent , and condominium apartments by 5.1 percent.

Central Toronto remains the most expensive place to live in the greater Toronto area. The average price of a detached home in March exceeded $1,400,000. Semi –detached homes are equally expensive, averaging more than $800,000 for a typical semi. The least expensive area to live in Toronto is now the west end. The average price of properties came in at $587,980, $21,000 less than east end properties. East end properties however remain the hottest real estate commodity in Toronto. All east end properties sold in only 10 days, with most of these sales taking place in Riverdale, Leslieville, and the Beaches. Not only did these properties sell quickly, but on average they sold for 109 percent of their asking price. This is an unprecedented pace for sales. The overall market, including the 905 region saw all properties sold in a startling 21 days, 3 days faster than sales took place in 2013.

Condominium apartment sales continue to lag as compared to free-hold sales, although the pace of sales in that market sector is also accelerating. In February condominium apartment sales took 34 days to sell. This pace was consistent with the pace of sales over the last year. In March all condominium apartment sales were achieved in a mere 29 days, the first time that the 30 day barrier has been broken. Given the fact that inventories in this sector are not increasing dramatically, it can be anticipated that over the short term condominiums apartment sales will continue to accelerate. In March 2,941 new condominium apartment listings came to market. Last March 2,850 new listing became available. Heading into April 4325 listings will be available for sale, only 5 more than in April 2013. It is interesting to note that condominium apartment sales now represents 45 percent of all sales that take place in the city of Toronto.

Looking forward April should, subject to available inventories, total close to 10,000 property sales. Last April the Toronto Real Estate Bard reported 9,535 sales. There are many buyers attempting to take advantage of five year interest rates that are less than 3 percent, and lenders are eagerly attempting to loan them money. However, with average sales prices beginning to move towards $600,000, an increase in mortgage interest rates maybe the trigger that will slow sales. Since there is no indication of a rate increase, there is no apparent end to the Seller’s market place we have been experiencing since the spring of 2013.

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.

Collingwood Real Estate Market Update – November 2013

November marked another impressive performance by the Georgian Triangle real estate market as reported by the Southern Georgian Bay Association of REALTORS® “SGBAR” for the Western District (formerly the Georgian Triangle Association of REALTORS® known as GTAR) which, as the name suggests is the western portion of the newly formed entity resulting from the recent merger between the Southern Georgian Bay Real Estate Association and the Georgian Triangle Association of REALTORS®.  With only one month remaining in the year, it looks as though 2013 will end up with more sales recorded for any year since the bumper year of2007. And with an early start to the winter, and the ski season already underway, the area should be alive with activity showcasing its many attributes for which it is so well known. All this builds upon the strong momentum established in the area thus far this year and is one more positive ingredient contributing to the ongoing robustness of, and outlook for the real estate market for the area into the new year.

The SGBAR (Georgian Triangle) MLS® Statistic Report for the month of November indicates that 147 properties were recorded as sold this month, 9% more than the 135 properties sold last year. These latest sales bring the year to date total to 2009 which is 7% more than last year at this time when 1869 properties were sold. Total dollar volume has surged even more, coming in 19% higher than last November, reflecting the increased activity in the higher end market. In fact November’s numbers for all price categories above $800,000 surpassed those for properties sold in every category in this range for the same month last year. Activity was also strong in the $200,000-499,999 categories.

Listings were also up this month with 10% more new listings coming onto the market compared to last year (428 versus 389), bringing year to date totals to 6109, still 2% fewer than last year at this time when 6235 had been logged.  Inventory is actually relatively flat with 2042 active listings recorded on the MLS® system at the time of the report, compared to 2028 at this time in 2012.

Prices continue to rise moderately in the area with the average residential sale price year to date coming in at $333,442, 3.8% higher than last year at this time when it was calculated at $321,361. The average sale price for single family residential properties for the month of November was actually down approximately 1% from the year previous, $343,191 compared to $347,475 last year. Year to date figures for this category however, show a 3.5% increase coming in at $332,324 compared to $320,657. This relative price stability is a positive omen for ongoing sustainability in the market moving forward, preserving the comparative advantage and relative affordability of the area.

The fundamentals for a strong and stable market outlook for the Georgian Triangle appear to be in place through to the end of the year and into 2014. Interest rates are forecasted to remain low for the foreseeable future to shore up the still fragile recovery both here and south of the border thus contributing further to the affordability of real estate in the Georgian Triangle. Job creation and income growth are also positive forces that are supposed to assist the provincial economic outlook, but given that most commentators and regulators appear to share the view that the North American economy is not yet out of the woods, a healthy dose of caution is still necessary precluding many pundits from making any definitive market predictions at this stage. As stated, however, there are no obvious storm clouds on the horizon for the Georgian Triangle real estate market at this point so prospects for investing in the area continue to look positive and bode well for another good year.

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

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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