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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.

Toronto Real Estate Market Update – April 2017

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

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

Toronto Real Estate Market Update – March 2017

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

Toronto Real Estate Market Update – February 2017

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

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

Toronto Real Estate Market Update – January 2017

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

 

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

Toronto Real Estate Market Update – 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.

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.

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.

Toronto Real Estate Market Update – January 2016

The new year started strong, producing 4,672 residential resales, an increase of more than 8 percent compared to the 4,318 sales the market produced during January 2015. The big story early in the year is not sales, but the lack of inventory.

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In January only 8,957 new properties became available for sale in the greater Toronto area. This compares poorly against the 9,547 new listings in January 2015, a decline of over 6 percent. The number of new listings combined with the properties that sold in January means that at the beginning of February there were only 9,966 properties available for buyers to purchase. This is a decline of almost 15 percent compared to the 11,600 properties available last year and an even bigger decline than 11,903 properties available for sale in February 2014.

 

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ROSEDALE: 337 Wellesley St, Toronto | $1,499,000

 

These numbers are exceptionally low. They translate into only 1.8 months of inventory in the greater Toronto area and 2.1 months in the city of Toronto.The difference is due to the larger supply of condominium apartments available for sale in the city, predominately in the central core. In early 2015 there was 2.2 months of inventory in the greater Toronto area and 2.4 months in the city of Toronto. These numbers favor sellers but create a troublesome imbalance in the market place. In same trading areas the lack of inventory has reached serious levels of concern. For example in the trading area that encompasses the Riverdale and Leslieville neighbourhoods, there are only 1.1 months of inventory, a record low.

 

The problem with these low inventory levels, aside from the fact that they leave buyers frustrated and prevent first time buyers from becoming homeowners, they are placing incredible upward pressure on sale prices.

 

In January the average sale price for the Toronto area came in at $ 631,092, more than 14 percent higher compared to January 2015’s average sale price of only $ 552,929. In the city of Toronto the number is even higher, and the average sale price in the central core, including all condominium apartment sales which took place in January, is now $ 731,243. If inventory levels stay low the continued pressure on prices will put sustainability in question.

 

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HOGGS HOLLOW: 3 Campbell Cres, Toronto | $4,498,000

 

Activity was not restricted to the lower priced properties in January. For example, 88 properties having a sale price in excess of $2 million sold in January. This compares with only 44 such sales during the same period last year, an increase of 100 percent. The tight market conditions have driven the average sale price for a detached home in Toronto to $1,061,789 and a semi-detached home to $ 713,972. The problem with semi-detached homes is that there are hardly any available to buyers. There were 10 trading districts in Toronto that had no semi- detached properties listed for sale in January.

 

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LEASIDE: 25 Malcolm Rd, 506, Toronto | $434,000

 

In the city of Toronto the only abundant source of available inventory is condominium apartments. In January there were 3,231 active condominium apartments listings. This supply represents almost 70 percent of the total available inventory of residential properties listed for sale in Toronto. It is not surprising that buyers are turning to condominium apartments as their only housing choice. In January condominium apartment sales were up by 11.6 per cent compared to last year. Prices jumped by 8.6 percent. In January the average sale price for a condominium apartment was $416,104. In Toronto’s central core the average sale price was $469,723.

 

It will be interesting to see what happens in February. It is unlikely that tight inventory levels will improve, which means the pressure on prices will continue.  The turmoil in equity markets may have an impact on sales, particularly the upper end, where choice rather than necessity plays a role in buying and selling decisions. Lastly on February 15th the new lending rules come into effect. After that date high ratio buyers will have to come up with 10 percent downpayments on loans that exceed $500,000. They can still make 5 percent downpayments on the first $ 500,000 of the loan amount. It is not anticipated that this change will have a negative impact on the greater Toronto resale market place.

 

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Report written by LLB, Chestnut Park Real Estate President and CEO, Broker of Record Chris Kapches

Toronto Real Estate Market Update – December 2015

It’s almost anticlimactic to write about the Toronto residential resale market for December and year end 2015. The anticipation of a record breaking year had evaporated by September. Barring some economic catastrophe, by the early fall it was becoming apparent that the long standing record of 93,193 sales achieved in 2007 was going to fall this year and it did, dramatically.

 

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By year-end 101,299 properties were sold by Toronto and area realtors, and that does not include the thousands of new construction properties that were sold over the same period. The sales achieved in 2015 exceeded the 2007 record by almost 10 percent.

That was not the only new record that was established in 2015. The average sale price for 2015 came in at $622,217, the highest annual sale price in history. It shattered the previous high of $566,624 achieved in 2014. This also represents an increase of almost 10 percent.

The rising average sale price for properties now means that it costs more than $1 Million to buy a detached house in Toronto. In December that number came in at $1,039,638. It also means that a large segment of Toronto’s resale market is now composed of properties with sale prices that exceed $1 Million. In 2015 10,867 properties were reported sold in this category, almost 11 percent of the entire market. In 2014 only 7,364 properties above this price point sold. Similarly $ 2 Million plus sales also increased dramatically in 2015. There were 1668 properties sold in this price point, a 43 percent increase over the 1,168 sold in 2014.

A concern throughout 2015, and one that will impact the Toronto and area resale market at least in early 2016, is the supply of inventory. At year-end there were only 1.8 months of inventory in the greater Toronto area. In 2014 there were 2.2 months, also low.

 

In the City of Toronto there were 2.2 months of inventory at year end. This compares with 2.4 months of inventory at the end of 2014. The larger supply in the City of Toronto is due to the high number of condominium apartments available for sale.

Condominium apartment sales were also a bright spot in 2015. In December 30 percent of all properties reported sold in the greater Toronto area were condominium apartments, almost 15 percent more sales than for the same period in 2014. On average that ratio of sales, between condominium apartments and freehold properties, was achieved every month during 2015. That means that more than 30,000 of the 101,299 reported sales for 2015 were condominium apartments, the bulk of these sales, approximately 60 percent, taking place in the City of Toronto. In the City of Toronto the average sale price for condominium apartments came in at just over $400,000, a long way from the cost of detached and semi-detached homes. Condominium apartments have become the entryway for first time buyers into Toronto’s record breaking market.

Although 2015 ended on a market high, a number of negative economic changes began in December and cloud the horizon as we attempt to peer into 2016. In December the Toronto stock market dropped precipitously, a drop that has continued into the first week of January. The Bank of Canada has reduced its 2016 forecast to less than 2 percent growth, probably closer to 1.5 percent. The west continues to suffer as a result of declining oil prices. As of the preparation of this report oil prices were hovering at $30 a barrel, the lowest they have been in more than 10 years. On the international scene China continues to struggle, with no sign of a change in it stagnating economy. When the Chinese economy slows, commodity oriented countries such as Canada are immediately impacted.

The falling Canadian dollar is both a positive and negative factor in the economy. It clearly makes Canada’s exports more attractive, but conversely it makes buying imported goods more expensive, making life more expensive for Canadians. It does mean that we will not see an increase in the bank rate anytime soon, which in turn means a continuation of historically low mortgage rates. It may be that these low rates, combined with Toronto’s attraction for new immigrants and those migrating from less prosperous areas of Canada, or what has been called the “Switzerland appeal,” may once again power the Toronto residential resale market to another record year .Given the number of properties that sold in 2015, a more prudent analysis would suggest that the Toronto and area market will come off the highs of 2015 and produce sales of closer to 95,000 properties in 2016, which would still make 2016 the second best year on record.