Posts in Market Commentary

December 2019 Market Review

January 28th, 2020 Posted by Market Commentary, Market Review No Comment yet

The Toronto real estate market had a decent December to close out 2019. There were 4,399 sales, up 17.4% over December 2018. It’s worth noting, though, that 2018 was a very slow year and December of that year saw only 3,781 sales. For reference, December 2017 saw 4,876 sales, and 2016 saw 5,305 sales, so 2019 was more in line with those years, and did not represent significant net growth. So, a relatively busy December rounded out a year that saw total sales for the calendar year hit 87,825 – up 12.6% over the decade-low 78,015 sales that were reported in 2018. All good!

At the same time, the increase in prices *was* rather significant: up 11.9%, to $837,788, over $749,014 at the end of 2018. Again, I attribute this mostly to the supply issue. New listings were down 18.1%, to 3,531, and total listings at the end of the month were down 35.2% to just 7,406. At a time when sales activity was up over the previous year, reduced availability of homes to buy (down 2.4% for the whole year) caused prices to surge.

I also like to reference the MLS® Home Price Index Composite Benchmark from time to time. It weights sale prices by home type (e.g. detached, semi-detached, townhouse, etc.), so it helps to smooth out the impact of, for example, super-high-end sales. That measure was up by 7.3% year-over-year basis in December 2019. TRREB* has pointed out, though, that from June 2019 onward, the annual growth rate in the MLS® HPI Composite Benchmark accelerated.

Note also that there will be price fluctuations throughout any given year, so the end-of-year price could be higher than the average price for a whole year, which may seem confusing at first, but it makes sense. 😉 So, as noted above, the average selling price in December 2019 was up almost 12% year-over-year, but for the entire calendar year 2019, the average selling price was $819,319, up a much more modest 4% over $787,856 in 2018. The ‘affordability’ issue is often exaggerated, but I think that a 4% annual increase is manageable for most potential buyers.

So, what to expect in 2020?! The economy is still pretty good (especially in Toronto), interest rates remain low, and I think there’s still a lot of pent-up demand for owned housing in the GTA. It’s still relatively quiet out there now but, based on the sale prices being reported this month, I think that we are in for another busy year in the Toronto real estate market!

*TRREB is not a type-o! The Toronto Board is now called the Toronto Regional Real Estate Board, which better reflects the territory covered by the Board.

March 2018 Market Review

April 4th, 2018 Posted by Blog, Market Commentary No Comment yet

Well, the TREB stats are out for March, and so are the breathless headlines! I was going to comment on a few of them, but the thought gave me a headache. 😉

While sales volume fell significantly year-over-year (down about 40%), one has to remember that at this time last year the market was still in the throes of utter madness. Very low supply had fuelled aggressive bidding by buyers, which caused a feeding frenzy of sorts, and that rapid price spike that I have referenced before. Compared to that period, the current market is a picture of serenity! Prices pulled back last year in/around April-May-June. Basically, comparing March of 2018 to March of 2017 is a bit pointless, because last year was an anomaly. I think that we’ll get a better sense of the true state of things when we see the April and May reports.

Nonetheless, the fact is that the average sale price was lower in March than it was last March, about -14.3%. Sales volume was down across all housing types, but the average price for a condo in the 416 was actually up 7.1%, again indicating that buyers have adjusted to high house prices by looking at the condo option. The average price for a detached house is now about $1,293,903, down from $1,561,780 at the same time last year. Keep in mind, though, that the price spike last year was +32.8% over March, 2016! That was obviously unsustainable, and it’s a good thing for the over-all market that those conditions only lasted a few months. The average sale price for a detached home in 2016 was $1,174,358; this year’s average is up about 10.2% since then, which I think is quite reasonable.

Keeping with the theme of looking back at 2016 for some perspective, overall, the average sale price in March 2018 is up 14% over March 2016, which tells me that we are in good shape.

The number of new listings dropped from 16,978 to 14,866, a decline of 12.4%. That might be because sellers were afraid of diminished returns, or it could just be a coincidence.  Even so, the number of active listings basically doubled, from 7,865 to 15,971. Again, that’s a good thing. There were 12,132 listings in March of 2016, which was down from 15,295 in 2015, so we are basically back to 2015 levels. Enough supply means that buyers have a better chance to buy what they want/need in the area where they want to be, and that’s a sign of a healthy real estate market.

Now that March Break and Easter are behind us, and the market has had time to absorb the new federal mortgage ‘stress test’ rules and the provincial housing regulations, I’m hoping that we get going with the spring market! If you plan to buy or sell any time soon, feel free to get in touch.

December 2014 Market/Year End Review

January 7th, 2015 Posted by Market Commentary, Market Review No Comment yet

As expected, December 2014 turned out to be a relatively busy month in the Toronto real estate market. The 4,446 transactions reported by TREB represents a 9.6% increase in sales volume over December 2013 – no mean feat in the face of 10.4% fewer available listings. That activity drove prices up 7% over the previous December, pushing the average sale price for the month to $556,602 (over $520,189 last year).

For the year 2014 TREB reported 92,867 sales, up 6.7% over 2013, but not quite enough to top 2007 – basically, just as I talked about last month. The average price in Toronto increase by 8.4%, to $566,726. (Note that the annual average is slightly higher than the monthly average for December. That type of small difference is not uncommon for the slower months. The months with the highest average prices in 2014 were May and October, which is fairly typical of the real estate market cycle.)

Regular readers will know that I have been tracking condo sales over the past year or so. In keeping with a fairly consistent pattern, condo sales in the 416 were up 16.1% over the previous December. The average price hit $387,612, up 5.4%. Despite lots of construction, there is no ‘glut’, and there has been no ‘crash’ – nor will there be. Condos represent a great starter home, and/or investment holding. That market ain’t going anywhere. (TREB will publish its quarterly Condo report soon, so I’ll add some details then.)

In terms of 2015, there are already loads of predictions out there. Naturally, most media outlets are (as usual) predicting something bad, but (as usual) I disagree with them. The Toronto real estate market is strong and stable – no matter what happens in Calgary or Vancouver – and will probably stay that way for some years to come. However, anything is possible, and this year has quite a number of interesting variables: the drop in oil prices (good news for most of us); the improving US economy (more good news); and possible movement in Canadian interest rates.

On that last note, it looks like rates will stay close to current levels through much of 2015, with possible smallish increases in the latter half of the year. It has been a good run of super-low rates, and that can’t last forever. However, rates will likely edge up in small increments over the span of a year or two. They won’t be jacked up suddenly; inflation is too low to warrant that. Of course, something could happen to stall or accelerate the increases, but at this point it’s reasonable to expect some kind of movement later this year, kicking of a period of increasing rates. Now would be a good time to look at your mortgage renewal, and/or get a pre-approval for your next purchase. (Get in touch with me if you need help with that.)

All in all, I expect that 2015 will be another busy year in Toronto real estate. Prices will continue to rise due to pressure from buyers. Sellers – who still have to present a fair product to the market, at a fair price – will stay in the driver’s seat. Whatever your move will be this year, I’d be happy to help you. Call or email me any time.

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First day of school… and the fall market!

September 2nd, 2014 Posted by Commentary, Market Commentary No Comment yet

After the summer lull (such as it was this year), real estate in Toronto really picks up steam after Labour Day. Basically, the first day of school more or less coincides with the first day of the fall market. This week we’ll see an up-tick in the number of new listings, and that will increase even more next week. Pretty soon we’ll have a lot more selection, but keep in mind that the listings bring out the buyers: it’s going to get hot out there!

Buyers: if you haven’t done so in a while, dust off your mortgage pre-approval and make sure that it’s up-to-date – and don’t forget that you need a deposit, too. In the hyper-competitive Toronto market most listing agents and their sellers are looking for roughly 5% of the offer price.

Sellers: it’s a great time to put your property on the market. I think we’ll get roughly two months of good selling (somewhat weather dependent), but if you have things to do around the house/condo you need to get on that. It you really don’t want to get delayed beyond early November….

I’m here to help folks with their real estate goals, so let me know if I can do anything to help you!

 

April 2014 Market Review

May 16th, 2014 Posted by Market Commentary, Toronto Land Transfer Tax No Comment yet

Sales volume ticked up by about 1.8% in April 2014 over April 2013, despite an 8.4% decrease in the number of available listings. Strong demand in a reduced-supply environment drove prices up by an average of 10.1% (to $577,898) across the GTA market. Not surprisingly, the average days on market also declined year-over-year, from 23 to 20. So, homes are selling faster and for more money…. Who knew!? 😉

The demand is partially seasonal, with the aptly named ‘spring market’ gathering steam. We can count on more listings hitting the market (compared to the recent winter months) and that always draws out the buyers, many of whom have been ‘shopping’ for months – if not years. Additionally, it’s a reflection of the ever-present demand for housing in a healthy, growing city. TREB complains often and loudly (and, of course, rightly) about the Toronto Land Transfer Tax, but not even that clunker can stop the Toronto real estate market.

Although detached houses have been getting most of the attention recently, the resale condo market continues to do well, too. Condo sales in the 416 (exclusive of the 905) were up 3.2%, with prices edging up by 1.8%. (The corresponding numbers in the 905 are +8.2% and +8.1%.) The average sale price for a condo in Toronto is now 384,758.

The late arrival of spring-like weather seemed to delay the onset of the spring market, so I expect that the summer market will be strong, too. You frustrated buyers should try to take advantage of this temporary increase in supply, but if you can’t this time around just hang in there. “Slow and steady wins the race!”

Toronto Real Estate – What’s going to happen in 2014?

January 13th, 2014 Posted by First-time buyers, Interest Rates, Market Commentary, Mortgage No Comment yet

Twenty-fourteen is shaping up to be another great year for the Toronto real estate market. As I have said many times before, Toronto is unlike other markets. It drives me nuts when people talk about the ‘Canadian real estate market’, as if trends in smaller cities and towns have anything to do with Toronto. Our economy is diverse and our population continues to grow, so there’s no mystery as to why residential real estate prices also keep growing. Of course it makes sense that the real estate market here is out-pacing many markets elsewhere in the country. How could it not?

Add to the picture this year the improving US and global economies. The jobs numbers that came out last week in Canada (net losses) and the US (weaker than expected growth) show that the ‘recovery’ is still, well, in recovery. However, there is a growing sense of inevitability that the US will finally show some upward momentum this year. Even Europe seems to have stumbled towards stability. As the American economy grows, so do Canadian exports, which will give a boost to our own mostly-stable, but slow-growing, economy. Once real growth kicks in we’ll be in for a few good years. (How many is anybody’s guess. This C.D. Howe report indicates that the pre-recession growth cycle was 16 years. We should be so lucky this time around!)

Another major factor this year is interest rates. I think that we are probably still on course for flat rates this year and into next. Even when rates do start to rise, they’ll most likely rise slowly, so as not to jolt the economy. We’ve got another few years of near-record low rates ahead of us. (My first mortgage, in 2001, was for 8.9% – more than double current rates – which was considered a great deal in those days. Perspective is important!)

The supply shortage that has been a feature of the Toronto market since late 2008/early 2009 has yet to ease. As a full-time, professional Realtor I spend a lot of time talking to other agents. As we start 2014 there is a continuing urgency among my colleagues to find homes for our buyer clients. The view ‘on the ground’ is that tight supply will continue to drive prices up, particularly for single family homes and small income properties. I believe that it’s safe to expect a 5-7% year-over-year increase in 2014.

On that latter note, specifically, I continue to encourage my clients, especially first-time buyers, to consider an income property. In the short term, the income will help you afford not only the purchase (assuming you live there, which is an important factor), but a decent lifestyle. If kids are in the plan, or even if you just want more privacy down the road, you can keep the income property and use the equity to move on at some point. Not surprisingly, though, duplexes and triplexes are in high demand/low supply. It’s not a slam dunk, but it’s definitely worth thinking about.

Mortgage rate tip: one of the big bank mortgage pros that we work with told a group of Realtors last week that he expects a mortgage rate ‘sale’ some time in February or March. It has happened in each of the last few years, so he thinks it will happen again. Watch for it, and if you are in the market, try to nail down an interest rate deal before the busy spring market. 

December 2013 Market Review/Year End

January 9th, 2014 Posted by Commentary, Market Commentary, Market Review No Comment yet

According to recently released TREB stats, there were 14% more residential re-sales in Toronto in December 2013 (4,078) than there were in December 2012 (3,582), while the number of new listings added to the MLS for the month was down 4% (4,102 compared to 4,267). Those factors again resulted in higher prices, which were up 8.9% December-over-December.

Looking at 2013 as a whole, there were 87,111 MLS sales, up about 2% over the 85,496 reported in 2012. The average price increase was 5.2% (reflecting intra-annual ebbs and flows in the market, i.e. the market does not increase steadily from month to month). That’s above inflation, indicating a capital gain, but not far beyond average wage increases, which were in the range of 3% for the year. Of course, there are costs associated with home ownership, but all in all real estate in Toronto was a good investment for the umpteenth time.

Since I have been keeping a close eye on the condo market, I’ll point out that December sales were up 20.7% in the 416 (27.8% in the 905), with prices up a solid 7.6%. There still seems to be a fair bit of inventory on the market, but things are on much more solid footing than they were a year ago.

The year 2013 ended in a sellers’ market, and 2014 is beginning in the same manner. Buyers have to be prepared for either competition with other buyers, or a long search (while patiently awaiting for an opportunity to negotiate with a seller)… or both. With the US economy FINALLY showing signs of picking up, we’ll see an improving economy in Canada, too. That’s good for everybody, of course, and it should take the wind out of the real estate doomsayers (I hope). 

I don’t see a resolution of the major issue of low supply of houses for sale any time soon, so prices will likely continue to rise. As long as they stay close to last year’s average increase, we’ll see sustained affordability. All in all, unless something unforeseen happens (alien invasion?), the Toronto real estate market is going to keep doing what it has been doing for most of the last 15 years: rise steadily, but remain affordable for most qualified buyers.

 

February 2013 Market Review

March 6th, 2013 Posted by Market Commentary, Market Review No Comment yet

The Toronto Real Estate Board (TREB) has released the numbers for February, 2013. Once again, a decline in the number of sales (volume, down about 15% from 6,809 February 2012 to 5,759 this February) coincided with an increase in the value of sales (price, up about 2%). That price increase, from an average price of about $500,249 to 510,580, reflects a somewhat flat (or ‘sideways’) market.

TREB attributes some of that to having one fewer business day this year (after last year’s Leap Year), but I would also suggest that a couple of big snow storms had something to do with it. It happens every time there’s a storm – not only is traffic tangled up for a couple of days, but lack of parking is a real hindrance to house shopping. I don’t have a crystal ball, but I’d expect the slack to be picked up over March and April.

However, there could be something else at play. Over my 10+ years in real estate I have seen it a few times. Every once in a while there is a pause in the market. Maybe it’s due to mortgage rules tightening up, or incessant gloominess from the media, or simply a wave of sentiment sweeping the market, but whatever the reason it causes ‘offer dates’ to pass without a peep, and buyers to dig their heels in regarding conditions (which is often a good thing). The market dozes for a week or two but then, inevitably, it takes off again.

Maybe this time it’s the calendar: next week is March Break for elementary schools. Thousands of families will leave town on vacations, or otherwise busy themselves with ‘stay-cations’. Either way, there will be less real estate activity. The number of new listings hitting the market has dipped this week, and will be even quieter next week. After that, though, we’ll see a surge in new listings and sales. Count on it. 😉

November-December 2012 Market Review

January 8th, 2013 Posted by Market Commentary, Market Review No Comment yet

With the month of December being chock-a-block with seasonal activities (including a couple of birthdays in my family), I neglected to post about November market activity, so I’m combining November and December. 🙂

November

November was not a super-busy month. Sales activity (volume) added up to 5,793 units sold, down 16% from the previous year. Prices were up about 1.6%, which I read as basically flat. Of note, TREB’s Home Price Index, which compares like house types (thus minimizing the effect of having more or fewer million-plus sales to influence the average) was up 4.6%. That 4.6% is meant to be the more reliable indicator.

November is busier than December, but by about half-way through, attention starts to shift to the rapidly approaching holiday season, and the real estate market starts to tail off. That said, I took a new listing in the last week of November; it sold in 11 days!

December

Typically a quiet month, December saw 3,690 sales, down a fair bit from the 4,585 reported in  December, 2011. However, the average sale price was up 6.5%, which is good – up enough to show some capital appreciation (after inflation), but not so much as to stretch affordability.

The number of active listings declined significantly from 18,311 to 13,241 in December. That’s most likely due to the season. While November saw 9,838 new listings, December had only 4,295 as many Torontonians turned their attention to Christmas, New Year’s Eve, etc. With the market slowing for the season, and with kids off school, some soon-to-be sellers keep their house off the MLS until the New Year. Plus, some un-sold houses simply go off the market for the month. This tightening of supply always means that the good houses that are on the market get plenty of serious attention from active buyers, so those listings sell (like 9 Gowan Ave). Overall, it puts a bit of pressure on the buyers!

TREB reported that the average sale price in Toronto was $497,298 in 2012, up about 7% from 2011. I’d say that stands in stark contrast to the (many, many) dire predictions for the Toronto real estate market produced by various prognosticators last year. (By contrast, I said this a year ago: “The market is ‘hot’, and will stay that way for the foreseeable future.” Read the whole post here.) I don’t feel like we are being bombarded with negative news now. Maybe those ‘experts’ are getting tired of being wrong. 😉

2013

Watch for some houses that were taken off the market in December to be re-posted in the coming weeks. Other houses, perhaps belonging to folks who bought in late November or December, will be brand new listings. Still others will be just a part of the continuous cycle. Either way, we’ll see a gradual increase in the supply of available listings over the next few weeks and into the spring, when I expect things to really pick up.

If the public mood moves past the general negativity we’ve experienced in the last couple of years, we’ll be back to a strong real estate market in Toronto – which in my books means increased supply to help keep the pressure off prices. Interest rates aren’t going anywhere until the end of next year, maybe later. That will help with affordability in the short-to-medium term, and if the average Canadian heeds the warnings of the government and central bank and pays off some debt while debt is cheap, we’ll all be ready for the inevitable (and likely gradual) rate increases after that. In short, I’m expecting another good year for Toronto real estate.

By the way, check out my Facebook page, where I regularly post interesting bits of information, links, etc. The media, which loves the doom and gloom, has actually produced a few relatively balanced reports about the year ahead, some of which you’ll find there. Plus, if you are not already following me on Twitter, do it now!

October 2012 Market Review

November 6th, 2012 Posted by Condos, Market Commentary No Comment yet

The Numbers: The breakdown provided by TREB is pretty interesting: 6,896 sales (7% fewer than October 2011); average price $503,479 (up 6.2% from October 2011). More specifically, the average price for a fully detached house was up 5%; the average price for a semi was up 7%; the average price for a condo was down 2%. (More on condos below.) The new-ish Home Price Index, which compares prices for similar houses over time, is up 5.1% from the same month last year. All in all, quite sustainable.

My Thoughts: Well, what to say about the Toronto housing market! I can’t tell you how many times I have written something like this: volume down, prices up. As has been the case for some years now, the market is limited by supply. Even in the face of trimmed demand (whether due to tighter mortgage regulations, the time of year, or because of endless ‘the-sky-is-falling’ nonsense from the media), there is still more demand in the Toronto market than there is supply. Thus, prices go up.

Interestingly, the average price of a condo has held up reasonably well over the last few months. The list below shows the average price for the given month, with a plus/minus number (percent change) relative to the same month last year:

June +2% $364,598

July -1% $347,996

August -4% $349,489

September +8% $377,422

October -2% $358,741

The variation in price month-to-month is a reflection of the intra-year variability in the market, which sometimes yields higher prices in the busier times of year (e.g. June and September), and probably also reflects the mix of sizes and types sold from one month to the next. By the way, the 905 has been more stable over the last few months, but with a much lower average sale price. If you want to buy a condo, we are probably getting into a good time to do that. If you own one that you were thinking of selling, but don’t have to sell, you might do better to hunker down for the next couple of quarters, or if you don’t live there, rent it out.

Houses are a totally different story than condos. That price appreciation is strong and steady. If you are a seller, there’s probably no need to fret – not through November, anyway. Once we get in to December the market will slow right down like it does every year. That said, there will be 3000-4000 sales in December, so it’s not like nothing happens. I usually make a sale in December, so if you do have to sell for some reason (e.g. you bought a great new place!), we’ll get it done.

If you want to sell in the New Year we’ll have to give January a few weeks to get a feel for what’s happening then. However, I think that we are in for a fresh round of economic recovery in the New Year. No matter who wins the US election today, the simple fact is that the nation and the markets will have some direction for the next few years. I spoke to a TD rep today who said that they are predicting a round of spending by American businesses (which have been sitting on about $2 trillion in savings). That will have a strongly positive impact on the Canadian economy, which may perhaps impact Canadian interest rates, etc. Any movement in our interest rates will likely spur a round of real estate buying as purchasers act to lock in record low interest rates. That would put more pressure on the market, and likely drive prices up again next year. Basically, more of same. 🙂