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Jul 12

2017

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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.

Jun 27

2017

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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.

Jun 16

2017

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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.

Apr 15

2017

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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.

Mar 10

2017

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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.

Feb 10

2017

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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.

Dec 14

2016

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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.

Apr 28

2016

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Toronto Real Estate Market Update – March 2016

We are running out of superlatives in describing the Toronto and area residential resale market place. Literally it is going to places where no market has gone before. Average sale prices, days on market, inventory and demand have reached levels that are unique and perhaps a little unnerving.

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In March the average sale price for all properties sold in the greater Toronto area came in at $688,181, marching ahead of the previous monthly record of $685,809, achieved only in February. Last March the average sale price was $613,815. This means that year over year house prices in Toronto have increased by more than 12 percent.

 

In the city of Toronto (416 districts) prices of detached and semi-detached properties have risen even more dramatically. The average price for a detached home in Toronto now sits at $1,174,358. In central Toronto the average sale price for a detached home came in at an eye-popping $1,863,704. What is even more startling is that all sales of detached homes in central Toronto took place in only 14 days (on average) and at 104 percent of their asking price. The numbers were lower in Toronto’s west ($938,678) and east ($808,988) trading areas, but these properties also sold at lighting speed, and for substantially more than their asking price.

 

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7 Salisbury Ave, Toronto | $1,100,000

 

The story was the same for semi-detached homes. The average price for a semi-detached home in Toronto is now $817,611. In Toronto’s central districts for the first time you now have to pay over $1 Million for a semi-detached house – if you can find one to buy. All semi-detached properties in Toronto’s central district sold in an unbelievable 11 days and at 107 percent of their asking price. Some trading areas in Toronto’s central market reported no sales in March. The reason was simply no semi-detached properties were available for sale at the end of March. A stunningly low level of inventory. It is not surprising therefore that the Toronto and area high end market has also reached astronomical levels. In March 228 properties were reported sold having a sale price of $2 Million or more. This compares to only 132 properties sold in the same category last year, an increase of more than 72 percent. The 228 sales in this category were primarily detached homes, with 3 condominium apartments also sold in this price point.

 

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124 Park Rd, Toronto | $17,700,000

 

Overall the market produced 10,326 sales, an increase of 16.2 percent compared to the 8,887 sales achieved in March 2015. Clearly sales were not a problem. What was, and is a problem, is the small number of listed properties available for buyers to purchase.

 

In March only 14,864 new properties came to market. This was almost 4 percent less than the 15,435 that came to market in 2015. By the end of March the level of available inventory was woefully low. In the entire greater Toronto area there were only 12,132 properties available for sale, more than 20 percent less than last year at this time. This represents only 1.7 months of inventory. In various trading areas and depending on housing type, inventory levels are even lower. For example, inventory levels for the combined eastern trading districts are only 1.3 months, with one district having less than 1 month of inventory, also a market first. With these historically low inventory levels it is not surprising that properties are “flying off the shelves”. In March the average days on market for all properties sold was only 16 days. In 2015, which was a record year for the Toronto market place for volume of properties sold, days on market was 20 days.
The only area of the market operating differently is the condominium apartment sector, but even activity in this market sector has also sharply increased. The average price for condominium apartments came in at $416,251. In Toronto’s central districts, which have the highest concentration of condominium apartments, the price came in at $484,000. In March the average price for condominium apartments rose by 4.3 percent. Volume, on the other hand, rose by more than 20 percent. Average days on market dropped to 25, well below where it was only a few months ago, however average sale prices rarely exceed the asking price, but like detached and semi-detached sales we are beginning to see it happen.

 

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170 Avenue Rd, 703, Toronto | $418,800

 

One wonders if this market can continue at this pace. The same concern was expressed about the Vancouver resale market, but it has surpassed the wildest expectations of real estate pundits. These same pundits are now clamouring for constraint, even suggesting legislatives intervention to slow that market. In Toronto we have not reached those levels, but what was only recently thought to be implausible is happening. Stay tuned for April’s market report.

Mar 16

2016

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Toronto Real Estate Market Update – February 2016

January’s exceptional start paled in comparison to February’s results. February set a new high water mark for sale prices in Toronto. This speaks to the power of the Toronto resale market. In the past when records for average sale prices have been set its usually in the months of April and May, the months that are most active. This year it occurred in February.

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In February the Toronto and area resale market reported an average sale price of $685,278, the highest ever recorded. The previous record was achieved in May of last year, with an average sale price of $649,648. The average sale price in the City of Toronto (the 416 districts) came in at $719,843. This average sale price is particularly startling in that it includes condominium apartment sales, which form the bulk of the sales in the City of Toronto. The average sale price achieved in February exceeded last February’s average sale price of $596,320 by almost 15 percent.

It is not surprising that the number of sales achieved in February was also a record. There were 7,621 sales reported, the highest number of sales ever produced by Toronto area realtors in any February. Last year there were only 6,294, an increase of more than 21 percent. This is an unprecedented increase for the month of February. The increase in sales was across all housing types.

In the City of Toronto detached property sales increased by almost 12 percent. Semi-detached property sales increased by almost 22 percent. But the biggest increase in sales was in condominium apartments. In February condominium apartment sales increased by more than 25 percent compared to February 2015. Given the steep increase in prices in Toronto, condominium apartments are the last resort for many buyers, especially first time buyers.

Prices for detached and semi-detached properties have increased dramatically in the last few months, once again breaking records in February. The price of the average detached house in Toronto is now $1,211,459. The price for semi-detached properties is not far behind at $848,835. Condominium apartments look very attractive at only $435,579. In Toronto’s central districts, where many of the city’s condominium apartments are located, the average sale price is $488,518.

In February all sales took place in only 21 days (on average), and much faster in some of Toronto’s trading districts and for detached and semi-detached properties. If you were fast enough to find one and offer on it, in most cases buyers found themselves in competition. Last year, which was a record breaking year for sales, it took 23 days for all properties to be marketed and sold.

Of special note are Toronto’s luxury sales. These are properties that had a sale price of $2 Million or more. In February 187 properties in this category were reported sold. This represents an incredible 82 percent increase compared to the 103 $2 Million plus properties sold in February 2015. Most of these sales were detached properties, however there were 5 condominium apartments that were sold in this category.

The focus as we head into March is Toronto’s inventory of properties available for sale. At the beginning of March there were only 10,902 active listings in the entire greater Toronto area. This compares with 12,793 in 2015, a decline of almost 15 percent. In the City of Toronto there were only 5,070 available properties, including 3,432 condominium apartments. In the greater Toronto area there are only 1.7 months of inventory. In January there were 1.8 months of inventory.

February’s inventory levels are the lowest that have been seen since the Toronto Real Estate Board began providing months of inventory data. We are a long way from a balanced market. That would require 3 to 4 months of inventory.

Looking forward we should expect more of what we experienced in February. It is unlikely that inventory levels will improve. Coupled with today’s historically low mortgage interest rates, there will be a mad scramble for properties becoming available for sale, which in turn will cause Toronto’s already high average sale prices to break new records.

Mar 15

2016

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Collingwood Real Estate Market Update – February 2016

This report summarizes the monthly statistics for the Western Region of the Southern Georgian Bay Association of REALTORS® (SGBAR). While the SGBAR trading area also includes the Eastern Region of Southern Georgian Bay due to an amalgamation of the Midland Real Estate Board and the Georgian Triangle Real Estate Board in 2014, this report is restricted to the Western Region, formerly known as the Georgian Triangle Association of REALTORS®.

 

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This report summarizes the monthly statistics for the Western Region of the Southern Georgian Bay Association of REALTORS® (SGBAR). While the SGBAR trading area also includes the Eastern Region of Southern Georgian Bay due to an amalgamation of the Midland Real Estate Board and the Georgian Triangle Real Estate Board in 2014, this report is restricted to the Western Region, formerly known as the Georgian Triangle Association of REALTORS®.

 

As reported in previous months, listing inventory continues to decline. Examining listings for the month of February 2016, there were 275 new listings vs 317 in February 2015, which represents a decline of 13%. Year to date comparisons show February 2016 with 523 listings vs 616 listings for February 2015, marking a decrease of 15%. February 2014 had 377 listings come on the market with 812 listings YTD.

 

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469501 31 GREY RD, GREY HIGHLANDS | $899,000

 

 

This trend has created a very strong seller’s market in certain neighborhoods such as downtown Collingwood and family neighborhoods in the Collingwood area resulting in multiple offers in certain price categories and in specific locations. Buyers must be ready to jump on properties as they hit the market. Having pre-approved financing and a good understanding of property values will be beneficial in successfully purchasing a property in current market conditions.

 

182 sales were reported in February 2016 which is a remarkable 44% increase over the 126 sales reported in February 2015. Even with the continued shortage of listings, sales are up for the third consecutive February, with February 2014 recording 113 sales. The YTD sales follow the same trend showing an increase of sales over the past three years. There has been a 26% increase in the sales YTD with 229 sales in 2015 vs 288 sales reported in February 2016.

 

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152 JOZO WEIDER BLVD, THE BLUE MOUNTAINS | $380,000

 

 

When comparing February 2016 to February 2015, there is an increase in the number of sales in all price ranges between $150,000 and $700,000. Sales in the $300,000 to $349,999 price category have shown the most activity with a dramatic jump from 11 sales in February 2015 to 34 sales in February 2015.

 

There have been 4 sales in the $900,000 to 999,999 price range vs 1 sale in February 2015. Sales in the $1,000,000 to $1,499,999 have increased from 3 in February 2015 to 6 in February 2016. The spike in sales from $900,000 to $999,999 may be in part due to the new Canada Mortgage and Housing Corporation (CMHC) rules for high ratio mortgages which changed February 15, 2016, even though most analysts believe the measure will have a minimal impact on house sales and prices.

 

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504615 GREY ROAD 1 , GEORGIAN BLUFFS | $599,000

 

 

The new rule now requires a 10 per cent down payment on the portion of any mortgage it insures over $500,000. Prior to February 15th, 2016 homebuyers were required to put down a minimum of five per cent to qualify for insurance, protection that lenders insist on when providing a mortgage worth more than 80 per cent of the home’s value. The five per cent rule remains the same for the portion up to $500,000. Homes priced at more than $1 Million require a minimum down payment of 20 per cent, and therefore the CMHC guarantee doesn’t apply.

 

Southern Georgian Bay has experienced a vibrant winter in spite of unseasonably warm weather conditions. Thornbury’s growth is noticeable with a new Foodland, LCBO and lively downtown core. The Blue Mountain Village is bustling with skiers, visitors and local residents all enjoying winter activities and terrific ski conditions. The surrounding communities are all thriving. All in all, the Southern Georgian Bay real estate market continues to perform well.