Market Report

Toronto Real Estate Market Update – May 2012

The Toronto Real Estate Board reported very strong numbers for the month of May. The only change to the market place in May was the number of listings that came to market and the longer term impact that more supply will have on market conditions. Until very recently demand outdistanced supply. We are beginning to see the very first signs of supply catching up to demand.

In May 10,850 residential properties were reported sold. This number represents the most sales reported in any month in 2012. Sales in May of this year exceeded sales as compared to May of last year by 11 percent. There were 9,766 sales reported in 2011. Year-to-date 41,651 residential resale properties have been reported sold. If the current pace of sales continues, sales for 2012 might top the 93,193 sales reported in 2007, the best year in the history of the Toronto and area marketplace.

What is emerging is that sales growth is the strongest in the 905 regions. Sales of detached and semi-detached homes in the City of Toronto are up by 6 percent over last year. In the 905 region sales of similar types of properties are up by 13 and 12 percent respectively. Surprisingly the same is true for condominium apartments. In the City of Toronto sales were up by 5 percent, and 12 percent in the 905 region. In absolute numbers, however, many more condominium apartment sales take place in the City of Toronto (1,632) than in the 905 region (704). There are a number of factors responsible for these variances. Generally property values are less in the 905 region than in the City. There is more supply. There is no additional land transfer tax. In the City of Toronto the municipal land transfer tax adds approximately $6,000 to the averaged priced property.

May saw one of the largest influx of new listings in many months. 19,177 new listings came to market, 20.2 percent more product than the 15,949 new listings in May 2011. Coupled with the 16,436 new listings in April, 35,613 new listings came to market in the last two months. During this same period 20,978 residential properties were reported sold. Approximately 15,000 properties remain unabsorbed heading into June. These 15,000 unabsorbed listings are reflected in the 20,462 active listings at the beginning of June. This is a 10 percent increase compared to the total number of available listings at the beginning of June of last year. If new listings continue to increase at May’s pace, price growth will moderate, as all but the most exceptional properties will take longer to sell. The months of supply data will be the statistic to watch over the coming months.

Given the foregoing it is not surprising that days on market data provided by the Toronto Real Estate Board is at record levels. In May all residential properties that came to market sold in 21 days. Last May it took (on average) 23 days for all properties coming to market to sell. In Toronto’s hot, and less expensive, eastern districts, sales took place in less than 17 days on average, even as low as 9 days in some of the eastern sub markets.

The average sale price in May came off the record average sale price of $517,556 achieved last month. May marked the end of a string of record breaking months. May average sale prices subsided slightly to $516,787, yet still almost 6.5 percent higher than the $485,362 average sale price reported in May of last year. Sales of properties having a sale price of $1 Million or more did establish a new record. In this category of homes, 668 properties were reported sold, eclipsing the record established just last month. In April 643 properties in this category sold. It should be noted that 100 properties had sale prices exceeding $2 Million, also a record.

Central Toronto remains the most expensive location to buy a home in the greater Toronto area. The average price of homes in Toronto at $568,768 is 12 percent more expensive than the averaged price property of $516,787 for the entire greater Toronto area. In central Toronto average prices rose to $681,261, 32 percent more than greater Toronto prices. And this includes condominium apartments. A detached home in central Toronto now costs $1,249,967 (almost identical to April’s price), and a semi-detached home will cost a buyer $766,440. As has been the case throughout 2012 the most accessible properties for buyers are available in Toronto’s eastern districts. The average sale price for all eastern districts in May came in at $439,376, well below the average Toronto resale price of $568,768.

Going forward the key to the way in which the market will evolve is supply. As this report has indicated, May saw one of the largest supply of new listings in years. A continuation of a large number of new listings over the remaining months of 2012 will cause the market to moderate. Prices will level off as buyers have more choice.

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