Oh the weather outside is frightful… but the Toronto market is actually doing pretty well. Contrary to some media reports, the Toronto real estate market is actually fairly stable at the moment. Though a lack of inventory is making it harder for buyers, the average sale price for the month of January has stayed fairly steady. For a full read on what’s been happening in the last month, check out the market update from our Chestnut Park’s CEO Chris Kapches…

2019 started positively, surprising many who were anticipating the double-digit declines that the Toronto and area residential resale marketplace delivered in November and December of last year. Although moderate, January delivered increased sales volume and average sale prices compared to January 2018.

There were 4,009 sales reported in January, a less than 1 percent increase compared to 2018, but an increase nonetheless. Encouragingly, January’s positive results were due to an improvement in Toronto’s 905 region. The Greater Toronto Area was dramatically impacted by the provincial foreign buyers’ tax and has lagged behind the Toronto 416 market since the spring of 2017. In January, the 905 region’s sales were up by 2.5 percent compared to last year, while the City of Toronto’s sales declined by 3.5 percent. The decline in City of Toronto sales was not caused by a decline in demand. Rather the decline was driven by a chronic shortage of supply. At the end of January, the Greater Toronto Area had 2.7 months of inventory, whereas the City of Toronto found itself with only 1.9 months of inventory. The difference in inventory is also reflected by the fact that sales in the 905 region took place in 33 days (an average), yet it took only 29 days for all properties in the City of Toronto to sell.

 Another positive aspect of January’s performance is the supply of new properties that came to market. In January, 9,456 new properties became available to buyers. This is a favourable 10.5 percent increase compared to the 8,561 new listings that became available last year. Entering February, active listings were slightly higher than last year. February began with 11,962 active listings compared to the 11,894 available last year. The bulk of these listings are located in the 905 region. OF the 11,962 active listings, 8,387, or more than 70 percent, are located in the 905 region.

January’s average sale price came in at $748,328, an increase of almost 2 percent compared to last year’s average sale price of $735,874. This is exactly the kind of increase that reflects a stable and sound market, not the double-digit monthly increases that became commonplace in 2016 and early 2017. Double-digit increases in average sale prices become unsustainable and unfortunately can lead to painful corrections.

In this regard, Toronto’s high-end residential market continues to adjust. In January, 76 properties having a sale price of $2 million or more were reported sold. This compared to 90 reported sold during the same period last year. The adjustment is also evident in the sale price to listing ratio witnessed in January. Detached properties in Toronto’s central districts are the most expensive properties in the Greater Toronto Area. All detached properties in these districts sold for 95 percent of their asking price. This ratio was much lower than the detached properties in other trading districts. For example, all detached properties in Toronto’s eastern districts sold for 100 percent of their asking price. The fact that the average sale price in the eastern districts is half ($916,588) that of the central districts ($1,938,617) is no doubt responsible for this divergence. Higher-end properties accelerated more dramatically during the pre-2017 introduction of the Ontario Fair Housing Plan and are retracting proportionally, especially with the introduction of the 15 percent foreign buyers’ tax.

Condominium apartments continue to be the most affordable housing form, but again, because of supply, average prices continue to increase. In January, the average sale price in the City of Toronto increased by almost 9 percent to $591,444. In Toronto’s central districts, where most condominium apartment sales are located, the average sale price came in at $677,997, a 10 percent increase compared to last year’s prices. In January, there were only 1,738 condominium apartments for sale in the City of Toronto and only 1,093 in Toronto’s central districts where most sales take place. This shortage of supply will continue to put upward pressure on prices, constrained only by affordability.

Although it is a little early in the year to be forecasting for 2019, January’s results – sales volumes, price increases and increases in supply – all point to a healthy 2019. Last year only 77,375 residential properties were reported sold, the lowest number since the recession of 2008. Barring any unexpected economic events this year, we should see between 83,000 and 85,000 reported sales, with average sale prices increasing by about 2-3 percent. January’s average sale price came in at $748,328. Last year’s annual average sale price was $787,000. By year-end, Toronto and area’s average sale price should be approximately $800,000. From a long-term sustainability prospect, we should be thrilled with this number.

PREPARED BY:

Chris Kapches, LLB, President and CEO, Broker

Despite the pressures of increasing interest rates and the new stress tests, the Toronto real estate market remains relatively stable, with more modest increases in price relative to the peak of the market in 2017. Which is great if you’re already in that market. But what about those buyers who can’t quite afford Toronto prices or those looking to invest in a less expensive property?

We’ve already seen a large shift of buyers to Hamilton in light of the above situation, contributing to a rejuvenation in it’s urban core. A trend we expect will continue into 2019.  Here’s 6 great reasons to invest in the Steel town real estate market…

6 REASONS TO INVEST IN HAMILTON

GREAT PRICES

You can buy twice the house in Hamilton for about half the price of Toronto. Lots of opportunities to buy into the housing market at affordable prices and raise a family in a safe and wonderful neighbourhood.

TRANSPORTATION

With the introduction of more Go Trains to make it easier to get to Toronto, Hamilton is on the rise. Internally the city is also adding bus service as well as looking to introduce an LRT going east to west in the city. 

JOBS AND OPPORTUNITIES

The job sector is thriving with an increase of jobs in Education (McMaster University and Mohawk College), Medical Institutions (McMaster Medical School and Teaching Hospital, Juravinski Cancer Centre, St Joseph’s Hospital) and over 300 Research Facilities in the area in Medicine, Tech and Agriculture. 

FINE DINING AND THE ART SCENE

Hamilton has seen a surge in fine Restaurants such as Brux House and Mattson & Co. on Locke St., a thriving local Organic Farming scene (Fernwood Farms and Lindley’s Farms) , a vibrant Art and Music scene (Hamilton Art Gallery, James St. North and Ottawa Street).

BEAUTIFUL SCENERY AND THE NIAGARA ESCARPMENT

Hamilton is surrounded by some of the most beautiful scenery and amazing views in Ontario with the famous Niagara Escarpment and the Bruce Trail. There are dozens of walking trails and water falls (Webster Falls, Tiffany Falls, Albion Falls) conservation areas and the famous Royal Botanical Gardens in the area. A revitalization of the waterfront is also in the works. Easy access to the entire Niagara Peninsula with it’s famous wine region and wineries, great views of Lake Ontario and of course Niagara Falls - all make this a world-renowned tourist destination. 

PIVOTAL POINT IN THE NIAGARA PENINSULA

Hamilton has great access to both Toronto and Niagara Falls as well as Buffalo with easy access to several airports; Hamilton Airport, Pearson International, Billy Bishop and Buffalo Niagara International Airport. 

“Hamilton is unstoppable," gushed a city news release from The Hamilton Spectator, which included a quote from Mayor Fred Eisenberger boasting that Hamilton has "the most diversified economy in Canada, with sectors including health care, manufacturing and agribusiness — that are helping to drive Hamilton's economy and create new opportunities for employment."

If you’re looking for a great place to raise a family in a more affordable and potentially peaceful environment, with great access to some wonderful amenities and great infrastructure, Hamilton might be for you. 

We have a great listing with income potential in Hamilton. Give us a call for more information. 

PHOTO BY SCOTT WEBB

Despite hot temperatures, June's gains were relatively modest. During a time of year when most start to migrate north, Toronto's market is still pushing price increases on average. 

Nasty year over year comparisons came to an end in June. For the first time in more than a year, we saw positive variances in the number of sales and average sale prices. It was unrealistic to compare the first few months of 2017 to any period. Those months represented the most frenetic period in the history of the Toronto residential resale market, even more, dramatic than Toronto’s last frenetic increase in real estate prices in the late 1980’s. Last year’s collective market psychosis was fueled by historically low-interest rates, demand that exceeded supply, and an unrealistic belief that house prices would never stop rising. When the Ontario Fair Housing Plan measures were introduced in late April, it was the electric shock that woke up the psychotic market. What the government’s measure couldn’t impact was demand. With a large number of people migrating to the greater Toronto area annually and the limited amount of new supply available to buyers, demand will always remain strong. It’s not surprising therefore that the residential resale market produced such strong numbers in June. 

During the month of June 8,082 properties were reported sold. This compares favourably with the 7,893 properties sold last year. It was not surprising that the average sale price also popped in June. In June the average sale price came in at $807,871 a 2 percent increase compared to the $791,929 average sale price last year.  As the chart below indicates, the average sale price for all properties sold in the greater Toronto area has been making a steady recovery since the beginning of this year.

Demand and supply will continue to play significant roles going forward. It is troubling that only 15,922 properties came to market in June. Last year 19,561 properties came to market, a decline of almost 19 percent. Although active listings at the end of June were on par with the number available to consumers last year, most of that inventory represents the residue of the market build-up following the implementation of the Ontario Fair Housing Plan.

What the average sale price belies is the fact that it was achieved notwithstanding that the high-end of the market continues to lag. In June 237 properties were reported sold having a sale price of $2 Million or more. Last year 264 were reported sold over the same period. On a year to date basis, 1,067 properties in this price category have been reported sold, a stunning reversal from the 2,483 that sold last year. June’s results are, however, encouraging, and as continued positive variances are produced through the balance of 2018, the higher-end will begin participating equally with the rest of the residential resale market.

The long-term problem will become affordability. Average sale prices are starting to inch towards the numbers that prompted the Liberal government to implement the 15 percent foreign buyers tax. In the city of Toronto, the average sale price for all properties sold was $870,559, approximately 9 times the average household annual income. The resilience of the Toronto and area market makes it clear that if there is insufficient supply, and growing demand, no amount of government engineering will make housing more affordable. It will take a collective political will at the municipal, provincial and federal levels to address the supply issue. Unfortunately, we have seen no collective initiative in this regard.

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