Toronto Real Estate Market Report Spring 2013

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

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

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

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

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

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

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

Prepared by Chris Kapches

What is a Condominium?

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

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