Posts in Market Review

Market Review – June 2017

July 7th, 2017 Posted by Market Review No Comment yet

The Toronto Real Estate market continued to moderate in June. The first point to note is that the average sale price was up 6.3% over June, 2016. Somehow, TREB’s HPI was up 25.3%, which may indicate that the unweighted average was brought down by a higher proportion of sales at the lower end of the market (e.g. condos: in June 2016 about 24% of sales were condos; last month is was closer to 30%). Over the last 12 months, the average price of a detached house was up about 10.2%, and the average price of a condo was up about 23%.

Of course, the louder news is that prices are down from earlier in the year. That’s no surprise, given the severity of the price spike in the first quarter – and, again, it’s a good thing. The market cannot sustain price increases in the 20-30% range. A bit of a pull-back was in order. As for the causes, who knows? Some speculate that it’s because of the 15% foreign buyers tax. Foreign buyers were such a small part of the market (maybe in the range of 5%…?) that it’s hard to say if enough of them have backed out of the market to have a measurable impact. Maybe it’s just buyers taking stock and getting the new lay of the land before proceeding. Or, maybe it’s just the usual spring surge in listings taking the pressure off price escalation. Either way, the market has been unsettled for a few months.

Still, it has been good for buyers – although fewer buyers took advantage of these more favourable conditions. The number of sales was down 37.3% from 2016, to just 7974 (and keep in mind that year-over-year the average sale price was up 6.3%). Those buyers had greater selection: the number of new listings was up 15.9% and the total number of available listings at the end of the month (19,680) was up 59.6%. For reference, the number of available listings in June 2007 was 21,789 – and that was down from 25,393 the year before! The current supply is up over last year, but we are still well below historical supply levels.

The market is not “correcting” in the sense that prices are going to go down below previous years. It’s leveling out. *BUT* these conditions won’t last. The Canadian economy is strong, and job creation is at its quickest pace since 2010. With interest rates set to rise, buyers will want to move quickly to make a purchase and secure as low an interest rate as possible. That’s going to fuel a surge in buying. What that will do to prices remains to be seen. Getting back to 5-10% annual increases would be great – healthy, great for investing, but also sustainable.

I think that sellers should hedge their bets and try to sell into this summer market. Things are going to pick up soon, and you don’t want to miss your buyer. Sure, prices may firm up through the second half of the year, but we’ve seen the top prices for 2017 already. Whatever we see for the rest of this year will be up from last year, but probably not by much. And buyers really should get out there and make their purchase ASAP. Whatever prices do, I doubt that the selection will get much better than it is now. The best time to buy is when nobody else is (or few others are) buying – that’s when you can make your best purchase. Lock in a great rate before they start rising.

The bottom line is: don’t miss your chance!

Market Review – May 2017: Double-counting of ‘new listings’ confounds data

June 16th, 2017 Posted by Blog, Market Review No Comment yet

Much is being made (e.g. in the media) about the ‘decline’ in sales in Toronto. As I have been saying (writing) for years, it’s one thing for the pace or volume of sales to decline, and another for prices to decline.

It’s true that the volume of sales in May 2017 was lower than sales in 2016. That said, 10,196 transactions is typical for a busy month in the spring market. The number of sales in May 2016 was 12,931, an all-time record for that month. So, we saw fewer sales than the record set last May. Do we have to set a record every month?! I don’t think so.

Also, the average price in May 2017 was $863,910, up 14.9% – or about $112,000 – still a very high increase. It was down from April (which was basically the same as March) because the market was so crazy in the first quarter, and that drove prices up quite dramatically. I’m glad to see that those super-high price increases are behind us.

Much is also being made of the increase in the number of new listings. As noted in the headline, that number is faulty: TREB has double-counted (and in some cases triple-counted) some new listings. Here’s how: a new listing is posted with an eye-catching price. The home-owner wants competition that will drive up that price. Then, due to the slowing activity that we’ve seen in the last six-to-eight weeks, ‘offer night’ comes and goes without a sale. The Realtor cancels the existing listing and posts a new listing with a higher price. TREB (through no fault of its own) can’t yet track that, so that property has appeared twice in the system and gets counted twice. You can imagine that this could easily happen a couple of times with the same property, and it happens all the time across the city. There could be hundreds, if not thousands, of double-counted properties in that “New Listings” number. Clearly, it’s not what it seems.

The better number to track is Active listings, which hit 18,477 last month, up 42.9% over May 2016. This is a good thing! The market has been trapped in a low supply situation for years, and if a bunch of new listings can take off some of the pressure, that would be great. Ten years ago, in May 2007, TREB reported  23,739 active listings (which was down from 26,220 the year before). The city population is higher now, and we are still nowhere near that volume of available listings for all the eager buyers out there. Why would anybody start ringing the alarm bells in conditions like this? My guess is sensationalism. Fear sells, doesn’t it? :/

The supply issue is perhaps more easily understood if one looks at the number of active listings added to sales. That number would provide a sum of the real estate activity for the month. In May 2007 (which I chose as a nice, round ten years ago), there were 23,739 active listings and 11,146 sales, which adds up to 34,885.

Last month there were only 18,477 active listings left at the end of the month and 10,196 sales, which adds up to 28,673, only about 82% of the activity recorded in 2007. With a rising population, solid economy, good job growth and continued low interest rates, we still have less real estate activity now than we did ten years ago. In this supply-constrained, competitive environment, what would cause a correction? There’s certainly a fear factor infecting the market these days, but underneath all that is the relentless supply shortage, and that should absolutely preclude a correction (beyond the simple re-balancing we’ve seen recently).

By the way, looking at the 11,146 sales in May 2007, from that ‘selection’ of 34,885, it’s clear that buyers had a lot more choice then; prices were up a manageable 5% that month. That was a strong market, and we would be lucky if our supply were to increase steadily over the next few months to get us back to that level.

 

April 2017 Market Review

May 8th, 2017 Posted by Blog, Market Review No Comment yet

April was another busy month in the Toronto real estate market. New listings finally started to appear (21,630 new listings for the month, up 33.6% over April 2016) giving buyers more choice. Coupled with 11,630 sales for the month (down 3.3% from the 12,016 recorded in April 2016), that allowed available listings to edge up 3% ,to 12,926 by the end of the month.

Price pressure remained in place, though, with the average sale price up 24.5% to $920,791. Note that the average sale price in March was $916,567, meaning prices remained essentially flat month-to-month. So, although we saw another big year-over-year price, this could be a sign that prices are leveling out, which will come as a relief to buyers.

The condo segment in the 416 had an impressive month. Sales volume was up a modest 8%, but prices soared 32.3%, keeping pace with last month’s increase.

The long-awaited increase in the supply of available listings is great news for the market, but it still leaves us far from historical levels. For example, in April, 2007 TREB reported 22,829 available listings, almost double the current level. The average Days on Market (i.e. how long the average listing took to sell) was around 30 days. Last month it was just 9, indicating how short-lived our supply really is. If we are lucky, we’ll get a couple of months of increasing supply, which should bring some balance to the market.

Right now it looks like the price increases are locked in, but it’s important for sellers to note that the market is not the same as it was in Jan-Feb-March. The new supply is taking some of the heat off buyers, meaning they don’t have to put everything on the line for every house that they see. So, while we are still seeing multiple offers on a lot of houses, we won’t get that for every single listing. Marketing – especially pricing – is more important than ever. But, we’ve seen this before; almost every spring, in fact! We make the adjustment, and move on.

The bottom line is that it’s still a great time to sell, and an even better time to buy.

 

 

 

March 2017 Market Review

April 10th, 2017 Posted by Market Review No Comment yet

The Toronto real estate market blasted through March, 2017. We saw a decent increase in new listings (17,051, up 15.2%), which we expect this time of year, but sales once again gobbled ’em up. There were 12,077 transactions, an increase of 17.7% over March 2016. By the end of the month, only 7,865 listings were left, 35.2% fewer than the same time last year.

This ongoing supply-demand crunch once again drove prices up. The average sale price (all types) hit $916,567 ($688,011 in March, 2016), up 33.2% year-over-year.

Condos in the 416 continued to surge too, with sales up 29% and the average price up 32%, to $550,299. The average price for a townhouse – which can be a bridge between condo apartments and houses – was up 22%, to $761,128. Clearly, there are options for buyers who can’t (yet) afford a semi or fully detached house in Toronto, and the increasing sales numbers in these segments indicate that more and more buyers are going that route.

The biggest numbers are in the fully detached segment, where the average sale price hit $1,561,780! TREB’s HPI, which takes into account differences among housing types, and tries to smooth out the averages, was up 28.6%, slightly lower than the overall average. Still, these are all hefty increases.

The next few months are going to be interesting. We’ll have to wait and see how many new listings come out for the spring market, and whether or not there will be enough to satisfy demand and take the pressure off prices. Sky-high pricing usually brings sellers to market. Again, the lack of options for sellers – i.e. where will they go after they sell? – remains a problem, but anybody motivated to ‘cash out’ will find a way. This market needs that, so I’m not saying that we’ll see a flood of listings and a subsequent correction. At this point, I’m just hoping for something to help ease that pressure.

I’m a big fan of Toronto real estate as an investment – that’s not going to change – but 33% annual increases are not sustainable. Maybe buyers will back off, and do their part to take control of the market (but don’t ask me where they will live while waiting for the market to cool). Of course, even lower price increases won’t likely go below double digits, and real estate should always be a medium-to-long-term investment, so it’s probably still better to buy sooner than later….

February 2017 Market Review

March 14th, 2017 Posted by Market Review No Comment yet

Sometimes I feel like I could just copy-paste last month’s review, update a few numbers and be done! The Toronto market has been reliably consistent for years and years: prices go up. Sometimes the supply goes down and sometimes… well, it always seems to be down these days. 🙁

With the consistently strong demand for Toronto real estate, sales volume in February was up 5.7% to 8,014 transactions (7,583 in Feb ’16). There were just 9,834 new listings, down 12.5% (11,234 in Feb ’16). By the end of the month, only 5,400 listings were left on the market. At the end of Feb ’16 there were 10,902; that’s a drop of 50.5%. With supply dropping by half, it’s no wonder that prices continue to surge. The average sale price (for all housing types) leapt 27.7%, to $875,983.

Do you know anybody who is still dumping on the condo market? Tell ’em that sales in the 416 were up 14%, and prices climbed 18.2%. That’s getting up around low-rise rates of increase…. On the bright side, the average condo price for the month was $515,424, far below the average house price.

There are always multiple factors affecting markets – supply and demand, interest rates, land transfer taxes, the job market, foreign buyers, etc. – but the biggest, most obvious challenge these days is supply (which you know I’ve been on about for a while now). There are lots of qualified buyers ‘out there’, and they are fighting like mad to get the home they need in the neighbourhood they want… and sometimes the neighbourhood they didn’t know they wanted until they got priced out of one or two others! I see it every day, and there’s no getting around it. We need more listings, but there’s no easy solution to that.

This city needs more low-rise housing, better transit and improved infrastructure – I know, *news flash*, eh? Fortunately, there are always people who can cash out of the Toronto market and move to another city. There are lots of good reasons to do that, and I happen to know a couple of people who are doing that this year. Stay tuned! 🙂

January 2017 Market Review

February 14th, 2017 Posted by Market Review No Comment yet

January marked a tremendous start to the 2017 Toronto real estate market. Sales volume was up 11.8% over January 2016 – which had been up 8.2% over 2015. New listings last month were down 17.6%, to 7,338, while the total number of available listings dropped 49.5%, to just 5,034 by the end of the month. That made for some intense sales pressure. Accordingly, the average selling price was up 22.3%, to $770,745 (for all housing types). That’s on top of the 14.1% price increase recorded last January. Even TREB’s HPI, which tries to smooth out the average by taking into account differences among housing types, increased 21.8%. Last January, that number was up a more moderate 10.7%.

The number of properties on the market last month was less than half what it was just two years ago: in January 2016 TREB reported 9,966 available listings; in 2015 it was 11,600. The bottom line is that the Toronto market continues to be defined by the scarcity of listings. All this while the population continued to grow….

It’s no wonder that the once-maligned condo market has firmed up – it’s doing its best to take up the slack. Condo sales in the 416 surged 26.8% last month (after increasing 11.6% last January), driving the average selling price to $471,409, up by 13.1% year-over-year (up 8.6% last January). Condos (if you can get one…) remain a good purchase, for occupying and/or as an investment.*

Although this example isn’t necessarily typical, it illustrates how dramatic the competition is currently: a house in Scarborough that sold in December and closed in January, just resold (just a couple of weeks later) for $150k more. That’s nuts. With so few houses on the market, the usual battle over homes has intensified, but I’d like to think that things will calm down a bit as the spring market generates more listings. Although we typically see more buyers at this time of year, the current – apparently desperate – mood may subside. One can hope, anyway….

Still, if you have a house to sell, let’s get it on the market ASAP!

*If your primary residence has significantly increased in value since you bought, and you have no intention of moving any time soon, you might want to consider drawing on some of that capital to buy an investment property that will both increase in value, and generate income down the road.

2016 Market Review – and a look ahead at 2017

January 17th, 2017 Posted by Market Review No Comment yet

2016 was a big year in Toronto real estate. For the second year in a row, TREB reported a record number of sales. Despite the volume of available listings shrinking, the number of sales hit 113,133 units, an 11.8% increase over 2015. The natural consequence of that is higher prices.

December was a prime example. Available listings were down 48.1%, to just 4,746 (from 9,137 in December, 2015), which TREB noted was the lowest inventory in 15 years. The number of sales reported to TREB in December was up 8.6% to 5,338 (from 4,917). Those tight market conditions drove up the average sale price 20% year-over-year, to $730,472 (from $608,714).

The average increase for the whole year was slightly lower, at 17.3%. However, the average sale price was basically the same, $729,922.

Note that the condo market, which not so long ago was reputed to be ‘over-built’ and primed to ‘crash’, has become the alternative of choice for an increasing number of buyers. Condo sales in the 416 were up 19.5% last month, with the average sale price up 16.6%. With an average sale price of $466,592 for a condo apartment, it’s easy to see why. (Condo townhouses are somewhat more expensive, at $569,864.) In fact, if anything, we may run into an ever-tightening condo market this year….

There’s no reason to expect anything different in 2017. Toronto is still a destination city, and the population keeps growing. CMHC is raising its premium on March 17th, so it will cost a bit more to buy if you can’t put 20% down (which means most first-time buyers), but that’s not likely to change overall market conditions. Mortgage rates may edge up a tiny bit, but they are super low these days and not expected to rise significantly in the next couple of years. That probably won’t be a factor in the Toronto market this year. The feds have tightened general mortgage qualification rules several times in recent years, and that does make it harder for first-time buyers, but I doubt that will affect the rate of sales and/or price increases. The bottom line is that the market is strong, and there’s no point waiting for a ‘correction’: get out there and buy.

And, yes, it’s easy to sell in this market, and harder than ever to buy. Still, more people are buying than in past years, so it’s not impossible! One has to get active, get out there and get shopping to find the right place. Don’t be put off by all the hoopla. Whatever you need, we’ll find it! 😉

Summer 2016 Market Review

September 13th, 2016 Posted by Market Review No Comment yet

I’ll admit it: sometimes, I get tired of repeating myself! The Toronto real estate market has risen so consistently – relentlessly, even – over the past few years that these monthly reports are not nearly as exciting to write as they once were.

Like last year, I’m combining July and August here. I started doing that because the summer is usually quieter than the spring and fall markets. As it happened, that wasn’t quite the case this year. I had expected July to be busy, but it exceeded expectations with 9,989 transactions – yet another monthly sales record. One wouldn’t have thought that likely given the on-going supply shortage….

Once again, while sales volume was up (1.8%), the number of new listings was down 7.4%, from 14,625 to 13,542. The total number of active listings fell from 16,673 to 11,346, a drop of 31.9%. Strong demand driving increased sales volume amidst fewer houses for sale is a recipe for frustration, isn’t it?

These market conditions caused the average sale price (across all types) to surge 16.6%, to $709,825. Note that it was below the June average of $746,546, which is typical. The market stays super tight (low supply and lots of buyers), but with a different mix of house types: fewer of the top-priced detached and semis, and a higher ratio of less expensive condos, which brings the average down.

On the topic of condos, sales in the 416 increased by a somewhat lower 9.8%, edging the average price up by just 8.2%, to $427,074.

August was even more impressive. Sales shot up 23.5% over August 2015, to a new record of 9,813 transactions. Much has been made of the point that there were two more business days in August 2016 over last August, but the fact remains that the number of active listings was down 37.7% to just 9,949 while sales continued to surge. The average sale price was up 17.7% over August 2015, to $710,410 (about the same as July, for much the same reasons).

Condo sales in the 416 jumped 33.5%, driving up the average price by 9.8%, to $446,612, which was also up over the previous month. In short, condo sales in Toronto are hot these days.

The fall market is upon us, and the number of listings seems to be increasing. That’s good for buyers, who get more selection, but also good for sellers, as the overall increase in activity correlates to higher prices. It ain’t easy navigating the Toronto real estate market, but I’m here to help. Call me any time!

June 2016 Market Review

July 7th, 2016 Posted by Market Review No Comment yet

June was a typically busy month in the Toronto real estate market. TREB’s Market Watch reported 12,794 sales for the month, up 7.5% from the 11,905 sales reported last June. I could copy and paste this from my last couple of market reviews: once again, new listings were down. There were only 16,980 last month, down 3.8% from the 17,659 new listings posted in June, 2015. The total number of active listings was down a whopping 31.4%, from 17,972 to just 12,327. Again, that’s a major source of frustration (and escalating prices) in the Toronto market: not enough listings!

The average sale price (for all types, not just the much-reported detached house) was $746,546, up 16.8% over last June’s $639,309. That’s a pretty steep hike, but not shocking given the lack of inventory.

The condo segment had a great month. Sales were up 15%, and prices edged up 6.9%, showing some strength, but again keeping condos as a great option for would-be house buyers who want to get into the market before they fall too far behind the price increases. Think about it: the sooner you buy something, the sooner you start building equity!

By the way, short supply of new listings isn’t the only reason prices continue to rise. There are other factors that affect housing prices in Toronto. Everybody knows that low interest rates (i.e. ‘cheap money’) are helping buyers; that’s a big deal, certainly. Our fantastic city’s rising population contributes a constant level of demand, too. Rarely reported is the non-stop improvements we see going into properties all across the city. Renovations and additions add value, and one doesn’t have to look far to see them happening. That house that just sold for way more than it did last year has been gutted and modernized. It makes sense that it would sell for much more, doesn’t it’?

July and August are usually a slower period – the ‘summer market’. If you are a buyer, keep your eyes open, as we may see some opportunities while other buyers are at the beach/patio/cottage! 😉

May 2016 Market Review

June 8th, 2016 Posted by Blog, Market Review No Comment yet

May was another blistering month in the Toronto real estate market. TREB reported 12,870 sales, up 10.6% over May 2015, and setting the record for that month. Once again, new listings declined, from 18,611 in May 2015 to 17,412, a drop of 6.4%. Hot sales and fewer new listings cut the total number of active listings from 18,585 last year to just 12,931, a huge drop of 30.4%.

That combination is the primary cause of the intense competition among buyers, and contributed to further price increases. The average sale price last month was $751,908, up 15.7% over $649,648 recorded last May. TREB’s HPI was up by roughly the same amount, 15%.

The 416 condo market also had a booming month. Sales increased by 21.7% year-over-year, while the average price was up a more modest 5%. There’s more selection in the condo segment, and although prices keep increasing, it’s at a much more manageable rate for first-time buyers. If you have your heart set on a house for your first purchase, you might want to consider a condo as a way to get your foot in to the real estate market….

Traditionally, the spring market goes ’til some time in June, and things definitely slow down after the July long weekend. In recent years, however, with the on-going supply shortage and teeming buyers, the summer months have remained competitive. It remains to be seen what exactly will happen this year, but I’m expecting stronger than usual activity in July, due to pent-up buying demand. I think that the key to success this summer will be to stay active!