Toronto Real Estate Market Update – September 2014

After a light breather in August, the Toronto residential resale market bounced back with some vigour in September. It would appear that August was Toronto’s vacation month with buyers and sellers focusing on seasonal matters rather than real estate sales. That was not the case in September. There were 8,051 reported sales in September, up almost 11 percent compared to the 7,257 sales last September. This double digit positive variance was consistent with the positive variances experienced by the market prior to August.

It is not surprising to note that the resurgence in sales also resulted in a spike in the average sale price. In September the average sale price for all properties sold in the greater Toronto area was $573,676, almost 8 percent higher than the September 2013 average sale price of $532,455. The average sale price for property sales in the City of Toronto (416 area) was $624,851, or 9 percent greater than the average sale price for the broader market. The highest monthly average sale price to date has been $584,925. That high was achieved in May of this year.

The central districts in Toronto continue to be the Greater Toronto’s most expensive real estate. The average price for all sales in the central districts was $739,657. This number would be substantially higher if condominium apartment sales were extracted. Most of Toronto’s condominium apartment sales are located in the central districts. The average sale price for detached properties in the central districts was $1,498,788 (a slight declined from August, which came in at $1,505,877.) Semi-detached property sales came in at $874,719. Detached homes in the central districts sold for 99 percent of their asking price. Semi-detached homes sold for an eye-popping 106 percent of their asking price, and they did so in a breathtaking 12 days.

On the whole the market was rapid, with all sales taking place within 25 days after properties were listed for sale (on average). Last year it took 27 days for all properties to sell. This is not record speed. There have been months when all properties sold in 21 days, but September’s was still a very rapid pace, making it extremely difficult for buyers to react.

The city’s eastern districts, no doubt because of their lower price points, continue to be in most demand. Sales of all detached homes took place in only 17 days, at 102 percent of the list price. Sales of semi-detached homes took place in a shocking 13 days at a startling 106 percent of their original asking price. Buyers hoping to purchase a house in Riverdale, Leslieville, North Danforth and the Beach essentially have to be prepared to pounce as soon as a listing hits the market.

Condominium apartment sales are becoming a considerable force in the Toronto market place, again no doubt because of their accessible price point. Although sales are not taking place as quickly as Toronto’s detached and semi-detached properties, the pace of sales is relatively brisk. In September it took 33 days for condominium apartments in the City of Toronto to sell. There were 82 percent more condominium apartments for sale in Toronto than the combined number of detached and semi-detached properties (4,579 condominium apartments as compared to 2,510 detached and semi-detached properties). As a result buyers have the benefit of both time and selection. Notwithstanding, condominium apartment sales surged by almost 16 percent compared to sales in September 2013, and average sale prices rose by 9.2 percent to $395,505. In Toronto’s central districts (where 66 percent of all of Toronto’s condominium apartments are located) the average sale price came in at $453,922 in September.

Inventory levels continue to be a concern. Although the number of new listings is increasing every month, these new listings are being quickly absorbed. In September 15,692 new listings came to market, 5.8 percent more than the 14,828 new listings that came to market last year. As a result, beginning in October there were 19,165 properties available for buyers to purchase in the Greater Toronto Area, 5.1 percent fewer than the 20,194 properties available in 2013. These listings represent only 2.2 months of inventory, far less than what would be required for a balanced market. We would need closer to 4 months of inventory to achieve a balanced market.

It is not surprising that with average sale prices rising as quickly as they have that sales of properties having a value exceeding $1 Million have grown dramatically. In September 669 properties with a sale price in excess of $1 Million were reported sold. There were 120 properties with a sale price in excess of $2 Million that sold, 7 of which were condominium apartments.

Expect more of the same in October. As indicated in the August report, there have been no economic changes that would have a negative impact on the resale market. Mortgage interest rates are historically low (2.75 percent is currently available), buyer demand remains strong, and inventory levels remain low. The perfect storm, with sellers safely on shore, and buyers in leaky boats on the turbulent sea. The only dark cloud on the horizon is the equity markets.

Toronto Real Estate Market Update – August 2014

Metaphorically speaking the Toronto residential resale market took a bit of breather in August. The numbers weren’t bad, but they were not as robust on a year-over-year comparison. Throughout 2014 the monthly positive variances compared to the same month last year have been strong, often approaching or exceeding double digits. This August the variance compared to August 2013 was only 2.8 percent, the lowest positive variance we have seen this year. In absolute numbers, August saw 7,600 residential resales. That compares to 7,391 a year ago.

It is impossible to draw market conclusions based on only one month’s data. It could be that August represented the last vacation month of this year, and both buyers and sellers took a holiday from the frenetic market that has been the norm in 2014. We await September’s results eagerly to determine if there has been any kind of shfit in the Toronto area market place. It must not be forgotten that the tight availability of inventory, other than condominium apartments, has also played a major role in shaping Toronto’s resale market.

Notwithstanding a slowdown in sales, comparatively speaking, average prices remained strong. August’s average sale price came in at $546,303, 8.9 percent higher than the $501,677 achieved in 2013. On a year-to-date basis Toronto’s average sale price is now $562,504. In 2013 the average sale price for the year came in at $522,983. In basic terms, the average house in the Greater Toronto Area is about $40,000 more expensive this year than last.

As has been reported throughout this year the most expensive trading area remains Toronto’s central core. In August the average sale price for a detached house in central Toronto was $1,505,877. These properties also sold very quickly, averaging only 28 days on the market. On average they sold for 98 percent of their asking price.

On the whole the market was still very rapid. For the entire Greater Toronto Area all properties, regardless of type, sold in only 27 days. Last year it took 29 days. It must be remembered that by historical standards these statistics indicate that sales are taking place at the speed of light.

The most in-demand neighbourhoods continue to be found in Toronto’s eastern districts. Detached home sales in the eastern districts all took place in just 17 days, with sales in the popular Riverdale and Leslieville areas taking place in a remarkable 11 days. Semi-detached home sales were even faster. All sales of semi-detached homes occurred in an eye-popping 12 days, and for a sale price that was 103 percent of the list price.

As mentioned earlier, inventory has shaped Toronto’s recent resale market. Lack of product, particularly in sought-after neighbourhoods, has been the primary reason that prices have increased so dramatically. New inventory in August will not change that problem. In August 11,733 new properties were listed for sale in the greater Toronto area. This compares with 12,103 last year, a 3.1 percent decline. The result is that beginning in September there will be 17,882 properties available for buyers to purchase, almost 5 percent less than last year at this time. Currently the greater Toronto area has only 2.3 months of inventory. The City of Toronto has 2.4 months. A market place requires almost 4 months of inventory to be regarded as balanced.

Condominium apartment sales continue to account for most of the reported sales in the City of Toronto. There were 2,760 sales reported for the City of Toronto in August. Of those 2,760 sales, 1,344 were condominium apartments. There is little doubt that Toronto is becoming a City of impressive intensification, with more apartments on the way. During one week in August alone Toronto City Council approved the construction of 7,000 units. It is estimated that over the next few years there will be a further 70,000 condominium apartments in the City of Toronto. The majority of them have already been sold. Although not at the same pace as freehold, condominium apartment average sale prices continue to rise. In August the average sale price rose to $370,899, 4.1 percent higher than for the same period last year.

High end property sales continue to remain strong. In August 518 properties having a sale price in excess of $ 1 Million were reported sold, and 77 with a sale price that exceeded $ 2 Million. Interestingly 5 of those $ 2 Million plus sales were condominium apartments.

Going forward September should return to the robust pace of sales that we witnessed earlier in the year. Nothing has changed that would influence the market otherwise. Mortgage interest rates continue to remain historically low, inventory levels are also historically low, and aside from August’s breather, which may be overstating it, demand hasn’t appeared to abate. It will be interesting to see if inventory levels pick up in September and the following fall months. Higher inventory levels will moderate price increases while giving buyers some choice and time to decide – perhaps even more than 30 days.

Toronto Real Estate Market Update – July 2014

July’s resale market performance was one of the strongest on record for the greater Toronto area, even though it was the third monthly drop in reported sales. In May 11,034 sales were reported, 10,158 in June and July 9,198. The monthly decline is consistent with seasonal patterns. The strongest month is usually May, with sales dropping during the summer months as both buyers and sellers focus on vacations and enjoying our limited, but warmer weather. A further drop in sales in August is also a part of the typical selling pattern.
Having said that the 9,198 residential resales achieved in July now has the greater Toronto market on track to post the strongest year in the history of statics keeping by the Toronto Real Estate Board. In 2007, the year before the recession which started in the fall of 2008, 93,193 properties were reported sold. On no occasion have sales ever topped 90,000 except for 2007. The second best year on record is 2011 with 89,096 residential properties reported sold. To date 57,910 properties have been reported sold in 2014. At this pace the year should achieve 94,000 to 94,500 sales making 2014 the best year on record.
Strong prices invariably follow strong sales markets. In July the average sale price came in at $550,700, 7.5 percent higher than the $512,286 recorded in 2013. The highest monthly sale price on record was achieved in May of this year. It came in at $585,037. It is not uncommon for the average sale price to decline in June and July. Expect the average sale price to come in at approximately $550,000 in August, before jumping to $ 575,000 or more in September. It is unlikely that the record average sale price of $585,037 will be exceeded during the remainder of this year.
In July all properties sold (on average) in 24 days. Although slower than June’s  pace at 21 days, 24 days is exceptionally fast for July. For example last July it took 28 days for all properties to sell. In some trading areas days on the market were even faster. The east end neighborhoods close to the central core of the city remain frenzied. In neighborhoods like Riverdale, Leslieville, and the Beach the pace of sales taking place was on average a little over 13 days. As has been reported before, condominium apartment sales are not as quick as sales of detached and semi-detached properties.
Oakville continues to be the most expensive area to live in the greater Toronto area. The average sale price for all properties sold in Oakville in July was $771,535. In the City of Toronto central properties (excluding condominium apartments) were the most expensive for buyers to purchase. Detached homes sold, on average for $ 1,360,816. Semi-detached homes sold for $751,287. Not only did they sell for these strong prices, but sold quickly, in only 21 and 14 days respectively. All semi-detached homes in the central districts sold for 103 percent of the initial asking price.
Condominium apartment sales in the City of Toronto are continuing to accelerate. In July condominium apartment sales were up 13.4 percent compared to the same month last year. In June sales were up 21.4 percent compared to June 2013. The 13.4 percent increase in July was the largest of any housing type. Second were townhouse sales which increased by 8.3 percent.
With average sale prices continuing to rise, condominium apartments may be the last refuge for some buyers, especially first time buyers. The average sale price for condominium apartments in July was $ 379,002, up 4.7 percent over July 2013. Compared to the average sale price for all other properties ($550,700), condominium apartment prices are approximately 45 percent less expensive. If interest rates were to rise, condominium apartments will become even more attractive.
Low inventory levels continue to be responsible, at least in part, for the strong sales achieved this year. In July 15,187 new properties came to market. Although this number was 8.2 percent greater than new listing that were placed on the market in July 2013, at the beginning of August there were still fewer available properties for buyers to purchase than last year. Last year there were 20,514 properties available for sale. This year there are only 19,549, 4.7 percent fewer. Until the number of new listings coming to market outpaces sales over a period of months, sales will continue at their  brisk pace and average sale prices will continue to rise by about 6 to 8 percent higher than the same month last year. Fortunately historically low interest rates are continuing to keep home ownership within the grasp of most buyers. A  family with gross family income of just over $ 80,000 and a modest down payment still qualifies to purchase an average priced condominium apartment in the City of Toronto.
Of the 9,198 reported sales for July only 3,315 were in the City of Toronto. The other 5,883 sales representing 64 percent of all property sales were in the 905 region. It may be time and descriptively more accurate for the Toronto Real Estate Board to change its name to the Greater Toronto Real Estate Board.

Toronto Real Estate Market Update – June 2014

June’s market performance was not as strong as May’s (11,049), but with 10,180 residential properties reports sold it was much stronger than June 2013. Last year only 8,821 properties were reported sold. This June the 10,180 properties sold by Toronto and surrounding area REALTORS® exceeded last year’s performance by 15.4 percent. June’s results represent the second strongest month this year to date.

With strong numbers in reported sales, the average sale price for properties sold in the greater Toronto area continued to be well above last year’s average sale price, although not as strong as the record setting $585,454 monthly average sale price for May. Generally, monthly average sale price declines in June, July, and August. This year was no exception. The average sale price came in at $568,953, lower than May’s by almost $20,000, but almost 7 percent higher than the $529,614 average sale price achieved in June of 2013.

The pace of sales remained strong in June. All properties, on average sold in 21 days, only one day slower than results in May, and 2 days, or 8.3 percent, faster than sales in June 2013. As was the case in May, all reported properties sold (on average) sold for at least their asking price. In the City of Toronto all properties sold (on average) for 101 percent of their asking price. This number was substantially higher in the case of detached and semi-detached properties: Condominium apartment sales were neither as fast, nor at a number approaching their asking price, yet frothy nonetheless.

It was not surprising that the number of high-end properties reported sold declined dramatically from May (properties having a sale price of $ 1 Million or more). In May 946 properties were reported sold in this category. This was an all-time high. In June sales in this category slipped to 775, a decline of 18 percent. As the summer months arrive it is common to see sales at this price point decline as buyers and sellers focus on holidays, the end of school terms, and recreational properties.

The most expensive area to live in the greater Toronto area was Oakville. The average sale price of all properties sold there was $ 808,944. The average price in Toronto’s central districts came in at $ 726,072, but included 1,011 condominium apartment sales which dramatically reduced the average sale price. Detached homes in the central districts averaged $1,448,267. The average price of a detached home in Oakville in June was only $940,847.

The average price of semi-detached homes in Toronto ranged from a high of $839,786 in the central districts to a low of $559,905 in Toronto’s western trading areas. A buyer had to move quickly to find and buy a semi-detached house in Toronto. On average all semi-detached houses sold in an eye-popping 11 days, and even faster in Toronto’s popular eastern districts, particularly neighbourhoods like Riverdale, Leslieville, and the Beach.

As has been discussed in previous reports, condominium apartment sales, though strong, are not as frothy as detached and semi-detached sales. In the City of Toronto 1,578 condominium apartment sales were recorded in June. This represents a 21.4 percent increase compared to sales for the same period last year. Average sale prices also increased as compared to last year. The average sale price for a Toronto condominium apartment came in at $390,569, an increase of 6.3 percent compared to last year’s average sale price. Sales of Condominium apartments were slower than freehold sales (averaging 30 days with sale prices only 98 percent of asking price).

To date 48,758 properties have been reported sold in the greater Toronto area. At this pace sales for 2014 could come in as high as 95,000 residential properties. This would break the record of 93,193 properties reported sold in 2007. With no indication of a mortgage interest rate hike during the remainder of 2014, a new record for residential sales in the greater Toronto area has a strong possibility of being achieved.

Toronto Real Estate Market Update – May 2014

The pace of Toronto’s residential resales accelerated in May. More sales were reported in May than in any month this year and last year. The highest number of sales reported in 2013 was 9,946 in May of that year. This May 11,079 properties were reported sold. This represents an 11.4 percent increase compared to the 9,946 properties that were reported sold in May 2013. The 11,079 sales was a record, the highest number of sales ever reported for the month of May for the greater Toronto area.

It is not surprising given the market’s performance in May, that in addition to record sales volumes, the monthly average sale price also hit a new record. The average sale price for all properties sold in the greater Toronto area came in at $583,204, the highest average monthly sale price on record, surpassing the previous high of $578,118 achieved only last month. May’s average sale price was 8.3 percent higher than the $540,544 average sale price the greater Toronto resale market delivered last May.

Not only did both sale prices and volumes produce records in May but these records were achieved in record time. The average days on market was only 21 days. Last year it was 23. In many trading areas the pace of sales was even faster. For example in Toronto’s eastern districts, all reported sales took place in only 15 days, a remarkable pace. Not only did all properties sell at a record pace, but all reported sales achieved sale prices that equaled or were greater than the list price. In the City of Toronto all properties sold for 101 percent of their asking price. In the eastern trading areas they sold for 103 percent of their asking price.

The market was also strong at the higher end, properties having an average sale price of $ 1 Million or more. In that category 946 properties were reported sold in May. This represented a 34 percent increase compared to the 702 sales that occurred in this category in May last year. It is interesting to note that 171 properties were reported sold having an average sale price exceeding $ 2 Million or more, a 43 percent increase compared to the 120 that sold last year. A cynical analysis would hold that with average sale prices increasing at the pace they have, what was an “average” house only a few years ago is now classified as a high end sale.

The most expensive place to live is in Toronto’s central districts. The cost of a detached home in central Toronto is now $1,441,785. A semi-detached home is selling for $ 901,659. Prices are no where near as high in the 905 region. The average price of a detached home in the 905 region is only $648,439, less than half of what it would cost to be in a “similar” home in Toronto’s central districts. A semi-detached home can be purchased in the 905 region for $443,644… $458,000 less than buying a semi-detached home in Toronto’s central districts.

Not all of the City of Toronto is as pricey as the central districts. The average price of a detached home in Toronto’s western districts came at $762,528, and a similar property can be found in the eastern districts for $631,594. Semi-detached properties, as expected, sold for less on average. In the western districts the average sale price in May was $553,912 and $ 637,347 in the eastern districts. Interestingly and no doubt due to short supply and the variety of housing quality, there is almost no difference in the average sale price between detached and semi-detached properties in Toronto’s eastern districts.

Toronto’s overall average sale price would have been higher if not for condominium apartment sales. This sector of the market, though robust, is simply not selling at the same pace as detached and semi-detached sales in the City of Toronto. In May 1,565 condominium apartments were reported sold in the City of Toronto. Including the 905 region there were 2,234 sales in total, or just over 20 percent of the entire market place. The average sale price for condominium apartment sales in May was $401,809 (also a record). Unlike other housing forms it took 29 days for all sales to take place and for average sale prices that were only 98 percent of the asking price. The difference between condominium apartment sales and freehold in the City of Toronto is inventory. In May there were 5,133 active condominium apartments available for sale. The total number of properties available for sale, including condominium apartments, was only 8,310. In other words condominium apartments available for sale represented more than 60 percent of all available properties for the entire City of Toronto.

Generally inventory levels remain low. At the end of May there were only 18,931 properties available in the entire greater Toronto area. This is 1 percent less than the 19,080 properties available for sale at this time last year.

Going forward we should anticipate more months like May. The market is strong for a variety of reasons, but predominately because of low mortgage interest rates. As this report was being prepared most lending institutions were offering 5 year fixed rates less than 3 percent. There is no likelihood that rates will be increasing in 2014. As a result, the market is on pace to deliver more than 90,000 property sales in 2014. This would make 2014 the second best year on record for property sales, surpassed only by the 93,193 reported sales achieved in 2007.

Toronto Real Estate Market Update – April 2014

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

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

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

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

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

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

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

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

Toronto Real Estate Market Update – March 2014

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

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

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

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

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

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

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

Toronto Real Estate Market Update – February 2014

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

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

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

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

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

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

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

Toronto Real Estate Market Update – December 2013 Year End Summary

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

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

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

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

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

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

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

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