Market Report

Toronto Real Estate Market Update FALL 2012

October’s market performance delivered another monthly negative variance as compared to October 2011, although the decline was not as pronounced as the decline in September. Sales in October were off by 7.1 percent compared to October 2011. In September sales were off by 21 percent as compared to September of last year. These statistics are not, however, reflective of the overall market. Not all sectors of the residential resale market are performing in the same fashion, with some trading districts and various types of properties, clearly not in market lockstep.

 

 

Notwithstanding a decline in overall sales as compared to last year, demand does not appear to have weakened. What has happened is that buyers are more judicious and deliberate, particularly when it comes to price, location, and housing type. This is evident in the fact that throughout the Greater Toronto Area all sales in October took place in only 28 days, only 2 days more than October 2011. This data includes all housing types, including condominium apartments, which are under-performing compared to the rest of the market.

 

In the city of Toronto all sales (again including condominium apartments) took place in only 26 days. Detached houses sold in only 19 days, even in Central Toronto where the average price for a detached home in October came in at $1,171,873. Semi-detached homes sold even quicker, in only 18 days. In the eastern trading areas (Riverdale, Leslieville, the Beaches) all sales on average took place in under 14 days. These numbers do not reflect a buyer’s market, particularly when sales prices, on average for these housing types, are exceeding 100 percent of the asking price.

 

Clearly the buyers are there, and if an attractive detached or semi-detached house becomes available, they have no hesitation in making a quick decision to purchase it. The difference in this market is that buyers are not, as in the early spring, randomly and indiscriminately, purchasing almost all properties that became available.

 

This buyer demand continues to result in rising home prices (except for condominium apartments). Even though sales declined from 7,425 properties in October 2011 to 6,896 this year, the greater Toronto average sale price increased from $474,241 to $503,479 over the same period, an increase of 6.2 percent. In the city of Toronto detached homes increased by 5 percent to $779,484, and semi-detached homes by 7 percent to $575,618. The average sale price of condominium apartments declined by 2 percent.

 

At the beginning of November there were 8,492 available properties for sale in the city of Toronto. Of those properties 4,849 are condominium apartments, or 58 percent. Of those 4,849 condominium apartments 3,072 were located in the central trading areas. In other words 63 percent of all condominium apartments for sale are in Toronto’s central districts. As more projects achieve registration, the supply of condominium apartment inventory will continue to increase, and with this increase in inventory prices will continue to decline, as apartments take longer to sell. In October it took 35 days for a condominium apartment to sell in the city of Toronto. This is substantially higher than the time it took for free-hold properties to sell. It is significant to note that only in May of this year all condominium apartments were selling in only 27 days, a 30 percent increase in selling time.

 

Overall the Toronto resale market finds itself with 2.4 months of available inventory of resale properties (including condominiums), and 2.6 months of inventory in the city of Toronto. In actual numbers this represents 20,737 available properties, a 16.5 percent increase compared to 2011. This increase can to some extent be attributed to the increase in the number of available condominium units. In October 13,054 new listings came to market, up 6.1 percent compared to the 12,306 that became available in October 2011.

 

This market report indicates that not all market sectors are acting similarly. Detached and semi-detached homes continue to sell quickly, particularly if they are well priced, and have an asking price less than $1,500,000. Condominium apartments take almost 50 percent longer to sell. These sales patterns reflect rising prices for detached and semi-detached homes (about 6 percent) and declining prices for condominium apartments (2%). This pattern will not change soon, but in fact will only be accentuated as more condominium apartments come to market.

 

Going forward we can anticipate these market conditions to continue. Condominium apartment sales will continue to be weak, probably through 2013. At some point prices will become so attractive (and assuming mortgage interest rates stay low) that condominium buyers will return in some force to the market, but that is not in the foreseeable future. Days on market will probably exceed 50 in the new year. As freehold sales decline (detached homes declined by 7 percent in October, semi-detached by 4 percent) price increase will begin to moderate, but there is no indication of massive price declines, as predicted by some economists.

 

Prepared by: Chris Kapches, Senior Vice President and Legal Counsel at Chestnut Park Real Estate Ltd., Brokerage