PHOTO BY TIM GOuW

The words of the month for April was recovery and supply. In the City of Toronto, we're seeing numbers coming closer and closer to last year's all time highs due to a lack of supply in many areas of the city. But we're not quite there yet, and appear to be only entering our recovery phase from last year's correction. 

Our President and CEO Chris Kapches breaks it down below; check out the video or read along. Be sure however to check out the chart of the average sale prices for the GTA from the past year, so you can get a sense of where we've been over the last year and where we appear to be headed. 

TORONTO REGION
REAL ESTATE MARKET REPORT

The Toronto and area residential resale market continued its recovery in April. For the fourth consecutive month, the market has shown improvement in both the growth of average sale prices and the number of properties reported sold. In April 7,792 residential properties were reported sold, and the average sale price for all properties reported sold in the Greater Toronto Area came in at $804,584. In January, the average sale price had slumped to $735,754. In four months, Toronto’s average sale price has increased by almost 10 percent.

The market has not recovered to where it was in April 2017, but it is showing signs that it might, particularly in the City of Toronto (416 region). The reason for this recovery is obvious. The fundamentals that drove the frenzied early 2017 resale market are unchanged: strong employment numbers, a growing economy, migration to the greater Toronto area, and insufficient inventory to meet buyer demand. With more than 100,000 people migrating to the Toronto area annually, the supply-demand scenario is no longer in balance. It’s a testament to the strength of the Toronto resale market that it has continued to recover notwithstanding three mortgage interest rate hikes and new more rigid stress testing for mortgage qualification.

In the City of Toronto, the average sale price came in at $865,817 for all types of properties sold, including condominium apartments. The cost of a detached property rose to $1,354,719, while semi-detached homes came in at $1,021,986. These numbers are starting to approach the numbers that the market was producing last year. Year-over-year sale volumes are down by 34 and 16 percent respectively, but in the case of semi-detached properties, this is a product of supply and not demand. In some of Toronto’s trading area, there were no reported sales of semi-detached properties. That’s because there were no listed properties for buyers to buy.

The strength of the market is profoundly demonstrated by the short time periods that detached and semi-detached properties remained on the market. All detached properties sold in only 17 days and for an amazing 101 percent of their asking price. All semi-detached properties sold in an eye-popping 13 days and for a startling  106 percent of their asking price. These numbers are only slightly short of what was happening last year.

Condominium apartment prices have risen consistently, even through the downturn in the market following the announcement of the Ontario Fair Housing Plan in April of last year. In April, and for the first time, the average sale price for all condominium apartments sold exceeded $600,000 coming in at $601,211. In Toronto’s central core, where more than 67 percent of all sales take place, the average sale price reached $667,345. Toronto’s most affordable housing form is rapidly becoming less affordable. Not only did condominium apartments sell with growing average sale prices, but they all sold in only 16 days and at 101 percent of their asking price. In the central core, they also sold at 101 percent of their asking price and in only 15 days.

Condominium Apartment sale prices are, like other housing forms, being driven by a severe lack of supply. At the end of April, there were only 2,130 apartments available to buyers, a little more than one month’s supply. Last year at the height of Toronto’s frenzied market there were 2509 condominium apartments on the market, a year-over-year decline of available inventory of more than 15 percent.

The high-end market has been the only laggard in Toronto’s resale market. Year-to-date only 600 properties having a sale price of $2 Million or more have been reported sold. Last year 2221 had been reported sold, a decline of more than 73 percent. This market sector is, however, also improving. In April the negative variance, as compared to last April, was only 48 percent.

The Toronto and area marketplace is beginning to send out two powerful messages. Firstly, the foreign buyer’s tax that was part of the Ontario Fair Housing Plan was directed towards a non-existent enemy. There were no hordes of foreign buyers buying Toronto real estate. There were no barbarians at the gate. That has been subsequently verified by not only the provincial government but by other sources, namely the Toronto Real Estate Board and CMHC. Secondly, the Toronto resale market is being driven by local, domestic forces. That being the case, governments should abandon any attempt to engineer the marketplace and focus on measures that will help the increase of supply.

Prepared by: Chris Kapches, LLB, President and CEO, Broker

If you haven't been tracking the sales stats in Toronto over the past months - let's face it, stats are kinda boring so we expect you haven't - you can check out this slick infographic produced by the fine people in our marketing department; yet another perk of working with a Chestnut Park Realtor. 

Condos continue to increase in price as the most affordable product on the market up to their average in April of $601,211 (+3.5% from March!). But more shocking perhaps is the overall Average Sale Price for Toronto, which is approaching something similar to last April when the market saw it's highest highs of all time. What does this mean? That the correction was just that and that buyers still hold Toronto real estate in high regard. 

If you're wondering where you stand as a buyer or where your property stands as a seller, please get in touch today for a free consultation. We're always happy to help!

photo by: Jorge Vasconez (@jorgeluis)

We're admittedly 1 week behind posting this information but we've got some excellent critical analysis of March's statistics...

We'll start with the video version. But if you're someone who prefers the written word, we've put the whole report below. 

In March the Toronto residential real estate market clearly demonstrated its resilience. Notwithstanding the provincial government’s attempt to engineer the market, it continues to respond to forces that have nothing to do with the Ontario Fair Housing Plan. That’s due primarily to the fact that the underlying basis for the province’s measures, namely foreign buyer speculation, were unfounded. Since the implementation of the Fair Housing Plan it has been demonstrated that less than 5 percent of all purchases of residential properties in the greater Toronto area involved foreign buyers.

The real and fundamental factors driving the Toronto and area marketplace have remained unchanged: low unemployment, rising wages, a growing (albeit modestly) economy, and most importantly, the combination of low supply and continuous immigration into the greater Toronto area. Ultimately what will control the Toronto residential marketplace is the market itself, specifically the cost of housing. The Fair Housing Plan, to its credit, did act as a wake up call to buyers, but ultimately it will be the cost of mortgage money, qualifying for mortgage financing, rising average sale prices (due primarily to a lack of supply) that will control and moderate
the residential resale market.

In March the lack of supply was clearly demonstrated by the rising average sale price. March saw an average sale price for all properties in the greater Toronto area of $784,558, an increase of 2.2 percent compared to January, and almost 7 percent higher than February’s average sale price. Demand was demonstrated by how quickly all listed properties sold in March. The average days on market was only 20. That is a pace consistent with the most aggressive seller’s market. In some areas of the market, particularly in the 416 region, the days on market was even lower.
All detached properties in the 416 region (City of Toronto) sold in only 17 days. All semi-detached properties sold in a shocking 13 days, and in only 11 days in Toronto’s eastern regions. All condominium apartments in the City of Toronto sold in only 17 days. As hard as this is to believe, this is a pace not that different from the delirious pace of the first four months of 2017.

When the market moves at the above-noted pace, it is not surprising to see average sale prices rising. In the City of Toronto all properties, including condominium apartments, sold for 101 percent of their asking prices, coming in at $817,642. All detached properties sold for 100 percent of their asking prices, coming in at almost $1,300,000. Unbelievably semi-detached properties sold for 107 percent of their asking prices, the average sale price exceeding $1,000,000. Even condominium apartments sold for 101 percent of their asking prices with an average sale price of $590,000. In Toronto’s central core, the average sale price for condominium apartments was $656,836, not that much less than average sale price for all property sales in the greater
Toronto area. Condominium apartment sales are now taking place at approximately $1,000 a square foot.

The ultimate reason for these incredible numbers is the lack of supply. Notwithstanding that the number of active listings in March (15,971) was 103 percent higher than the 7,865 properties available last year, the bulk of the available listings are located in the 905 region. Of the 15,971 available properties for sale, 75 percent are located in the 905 region. In the case of detached properties, 83 percent of all detached properties are located in the 905 region. The situation involving condominium apartments is reaching crisis proportions. In March 1,573 condominium apartments were reported sold. At the end of March there were only 1,854 condominium apartments available for sale, most of them in Toronto’s central core. If this rate of absorption
continues, there will be almost no product for buyers. This is particularly troubling because condominium apartments have been the only affordable housing type available to buyers.

Detached properties were the only housing type that continues to lag behind the rest of the Toronto market. Sales were off, year-over-year, by more than 40 percent, and average sale prices were off by almost 18 percent. The explanation is self evident. During last year’s delirious market, mortgage money was historically cheap, and relatively accessible. Since then not only has mortgage money become more expensive – three bank rate hikes in the last year – but new mortgage stress testing for conventional mortgages makes qualifying substantially more difficult. It should also be noted that during the January through April real estate madness
of last year’s average prices reached astronomical levels, levels that simply could not be sustained.

Going forward we are not likely to see much change in Toronto’s residential resale market. The key to change is more supply. There is no indication either at the provincial or municipal level that measures will be taken that would have a positive impact in this area. For political reasons governments may attempt further engineering, but any such actions will have a limited impact on the market, but are likely to have broader, negative economic impact. Without dramatic change to Toronto’s available supply, Toronto will become one of many other cities in the world that because of their political and financial stability where real estate ownership will not be
available to everyone. That begs another question: what about the rental supply?