Toronto Real Estate Market Report Spring 2013

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

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

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

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

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

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

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

Prepared by Chris Kapches