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Toronto Real Estate

A new decade, but little change in Toronto’s residential resale market. As anticipated in my December Market Report, January came in strong with 4,581 sales in the greater Toronto area. This was a stunning 15.4 percent increase compared to the 3,968 sales reported for January last year. Enthusiasm should be slightly muted, given the fact that last year’s results were low by historical standards. For example, in 2016 more than 4,600 properties were reported sold, a number that jumped to 5,188 in 2017.

Not surprisingly average sale prices also advanced in January, but as in the case of sales, far from record levels. In January the average sale price came in at $839,363, more than 12 percent higher compared to last year’s average sale price of $747,175. The average sale price for all property sales in the City of Toronto (416 region) came in higher at $884,385. The highest monthly average sale price recorded for the Toronto and area market place was $920,000 in April of 2017.

January’s rising numbers become a little unnerving when considered against the back drop of available inventory. Only 7,836 new listings came to market in January, a decline of more than 17 percent compared to the 9,458 that came to market in 2019. Due to the large number of sales and the paucity of new listings, buyers enter February with only 11,962 available properties, more than 35 percent fewer properties than were available last year at this time. This will no doubt put upward pressure on prices, but with wages increasing by only 3.5 percent and mortgage stress testing in effect, there are limits as to how far buyers can stretch, particularly if interest rates stay stable or rise.

2020 maybe the year during which higher priced residential properties see an increase in sales. Higher priced properties have statistically lagged behind the resurgence of the overall market. For example, in January 2018 only 76 properties having a sale price of $2 Million or more were reported sold. Last year that number increased to 90. This year 130 properties were reported sold in this price category, an increase of 44 percent compared to January 2019. It is interesting to note that the number of condominium apartments in this price point is also increasing. In January, 13 (or 10 percent) of the 130 properties that sold having a sale price of $2 Million or more were condominium apartments. Last year there were only 6.

In the broader condominium apartment market supply is becoming a serious concern, as is the rise in average sale prices, particularly in the City of Toronto. At the end of January there were only 1,779 condominium apartments for sale throughout the greater Toronto area. In the City of Toronto there were only 1,246. These numbers represent a 33 percent decline compared to the number of condominium apartments available for sale last year at this time. Based on the number of sales registered in January, these numbers translate into 1.3 and 1.35 months of inventory, historic lows.

It is not surprising that condominium apartment sale prices have soared. In January, the average sale price for condominium apartments in the greater Toronto area came in at $630,000. In the City of Toronto the number was 8 percent higher at $679,000. In Toronto’s central districts, were almost 65 percent of all condominium apartment sales are recorded, the average sale price came in at $758,000, 12 percent higher than the Toronto market as a whole. It is also not surprising that all condominium apartment sales, both in the greater Toronto and City of Toronto market places, took place at 101 percent of their asking price.

The rise in condominium apartment sale prices has had a spillover effect on semi-detached property sales. Over the last year the spread between the average sale price of a condominium apartment and a semi-detached property, particularly in Toronto’s central districts has been dramatically narrowed. In January the average sale price for semi-detached properties was $1,000,000, only 24 percent higher than the average sale price of condominium apartments in the City of Toronto’s central districts. As a result of this declining spread, buyers who might have chosen to buy a condominium apartment have instead looked to purchase a semi-detached property in some of Toronto’s more desirable eastern and western trading areas. This has, in turn, resulted in an unprecedented shortage of available semi-detached properties. In January, there were, shockingly, only 92 semi-detached properties in the entire City of Toronto available for sale. In January there were 91 sales. Effectively every semi-detached property that becomes available for sale will be sold before the end of the month. And again, not surprisingly, for 107 percent of the asking price in Toronto’s eastern trading areas, and 104 percent in the western trading areas.

January’s residential resale date makes it abundantly clear that the Toronto and area market pace is strong and robust. What is also clear is that demand far exceeds supply. Unless sellers decide to take advantage of rising resale prices, 2020 will be remembered as the year of buyer frustration. There is no doubt that unless supply can be increased, like other international “supercities”, buyers will begin to look to second-tier cities around Toronto to satisfy their housing needs.

Prepared by Chris Kapches, LLB, President and CEO, Broker, Chestnut Park® Real Estate Limited, Brokerage.

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Toronto Real Estate

The December market for residential resale properties came in exactly as anticipated, with substantially higher sales and average sale prices compared to last December, and not surprisingly, the month and year ended with a critical shortage in available resale inventory.

In December 4,399 properties were reported sold. This is not a record high for the month, but these sales represented more than a 17 percent increase compared to the 3,746 properties reported sold last December. Past Decembers have seen more properties sold during the month, but the 4,399 properties that were sold was a very healthy recovery from last year’s dismal results.

The average sale price for all properties sold in the Greater Toronto Area came in at $837,788, almost 12 percent higher than the average sale price of $749,014 achieved last year. Homeowners will no doubt be happy with this increase, but the rapidly rising prices, once again approaching record levels, put a strain on affordability and their longer-term sustainability, especially with salaries and wages increasing by about 3 percent annually.

The average sale price in the City of Toronto was even higher coming in at $885,132, an exceptionally high number for the month of December when sales of higher-priced properties decline. This increase was driven by the sale of 465 detached properties sales having an average sale price of $1,363,477, a 19.5 percent increase compared to the number of detached properties that were reported sold in December of 2018.

On a yearly basis, 87,825 residential resale properties were reported sold. This represents a strong 12 percent recovery compared to the 78,015 properties reported sold for 2018. Compared to recent resale history, 2019’s results are still weak. In 2014, 92,782 properties were reported sold. That number jumped to 101,213 in 2015 and then to 113,040 in 2016, before dropping to 92,335 in 2017. The 113,040 properties sold in 2016 remains the record high for Toronto and area sales.

Notwithstanding rising resale prices, 2019 sales results might have been higher had there been more inventory for consumers to buy. Housing data related to inventory at the end of December is seriously concerning.

In December 3,531 new properties came to market. That compares poorly with the 4,309 that came to the market last December. Unfortunately, we witnessed inventory declines throughout 2019. As a result, at the end of the year, there were only 7,406 properties available to potential buyers, a stunning 35 percent decline compared to the 11,431 properties available at the end of 2018. In some trading areas the situation has gone beyond critical. For example: in all of Toronto’s eastern trading areas 49 semi-detached properties were reported sold. At the end of December and heading into 2020 here were only 7 detached properties available to potential buyers. These are unprecedented low numbers. At the end of the year, there were no semi-detached properties available in Toronto’s popular eastern trading areas: Riverdale, Leslieville, and the Beaches.

The inventory shortage has also spread to Toronto’s condominium apartment sector. In December 844 condominium apartments were sold in the City of Toronto. During the same period, only 779 new condominium apartment listings came to market, clearly far less than the overwhelming demand. As for the end of December, there were only 1,148 condominium apartments for sale in the City of Toronto – based on December’s sales that is just 1.2 months of inventory.

Year-end numbers indicate that inventory will play a crucial role in the success of the Toronto area residential resale market in 2020. If sellers decide to take advantage of the near-record sale prices and bring their properties to market, Toronto’s residential resale market will be strong and produce year-end sales that exceed the 87,825 properties that were reported sold this year. Price appreciation should be muted by the fact the average prices are at record highs and restrained from further growth by affordability.

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Toronto Real Estate

The November market report has basically written itself. It is another month with results almost identical to the preceding eight months. Sales were up substantially compared to November last year, and similarly average sale prices also rose.

Specifically, sales rose by almost 15 percent compared to last year, from 6,206 to 7,090 this November. The average sale price rose over 7 percent, from $787,349 last year to $843,637 this November. These are greater Toronto and area numbers. In the City of Toronto the average sale price rose to a stunning $910,419. This number is stunning for two reasons: it includes all condominium apartment sales, and secondly, it is approaching the record high average sale price achieved in March 2017, before the implementation of the foreign buyers tax and the mortgage stress testing which took effect in January of 2018.

There are two stories that emerge in the November residential resale data. Firstly, the concern about supply. In November only 8,650 new properties came to market. This compares very poorly to the 10,538 that came to market last year, a shocking 18 percent decline. Even more concerning is the available supply as we move to the end of 2019. At the beginning of December there were only 11,958 properties available, in the entire greater Toronto area, for buyers to inspect and purchase. Last year, and this number was low, there were 16,420 available properties. That means the available inventory has declined by almost 30 percent on a year-over-year basis. On a months-of-inventory analysis, there are only 2.2 months of inventory for the greater Toronto area, and only 1.8 months for the City of Toronto. It is not surprising therefore that all properties that came to market in November sold in 24 days and for 99 percent of their asking price (100 percent in the City of Toronto).

The second story that emerges, and one much more positive than the first, is the resurgence of the 905 region residential marketplace. Following the implement of the foreign buyers tax in April 2017, the 905 region resale marketplace came to a standstill. It remained stagnant until the mid-point of this year, when signs of life appeared. Detached property sales rose by almost 28 percent in November, while townhouse sales increased by almost 22 percent. Detached and townhouse property sales in the 905 region accounted for almost 50 percent of all sales achieved in the greater Toronto area in November.

Notwithstanding the surge in 905 region sales, average sale prices in the 905 region are still low compared to the City of Toronto.

As we head to the end of the year, demand in the greater Toronto area remains strong, even though average sale prices are approaching record highs. The concern is and will be supply. With only 11,958 residential properties available to buyers, all eyes will be on the new supply that comes to market in 2020. Hopefully the record average sale prices will cause sellers to capitalize on the strong value of their properties, motivating them to bring them to market.

Prepared by Chris Kapches, LLB, President and CEO, Broker, Chestnut Park® Real Estate Limited, Brokerage.

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Toronto Real Estate Agents

October represents eight months of market recovery and stability in the Toronto and area residential resale marketplace. October roared in with 8,491 sales, 14 percent stronger than the 7,448 residential properties reported sold last year and almost 700 more properties than were reported in September. It is now obvious that buyers have adjusted to the mortgage stress test that was introduced in January of last year. At that time the residential resale market came to a standstill, with average sale prices struggling. The chart below indicates how dramatic the improvement in average sale prices between 2018 and 2019 to October has been.

Octobers results indicate that there has been a strengthening in all market regions. Until recently the 905 region was recovering at a much slower pace than the City of Toronto (416 region). That has all changed, with the 905 growing at a pace equal to the City of Toronto. It should be noted that there is continued disparity in average prices between the City of Toronto and the 905 regions. For example in October the average price for detached properties in the City of Toronto was $1,323,000 as compared to the 905 region where prices came in at only $952,000, a difference of more than 35 percent. The disparity is even more dramatic in the case of semi-detached properties. The average price for a semi-detached property was almost $1,100,000 in the City of Toronto. Shockingly the average price for semi-detached properties in the 905 region over the same market period was only $690,000, a difference of almost 60 percent.In the City of Toronto semi-detached properties are actually becoming a rarity, with inventory levels having plunged to record lows. At the end of October there were only 296 semi-detached properties available to buyers in the entire City of Toronto. This number is even more startling when we consider that in October 322 semi-detached properties were reported sold. In other words in November there will be 26 fewer semi-detached properties available to buyers than the number that sold in October. It is not surprising therefore, that all semi-detached properties in the City of Toronto sold in a breathtaking 14 days and at an average sale price of 107 percent of asking price. In Toronto’s eastern neighborhoods the situation is critical, with semi-detached properties selling in less than 10 days and at sale prices exceeding asking prices by more than 110 percent.

Inventory levels worsened in October, with new listings declining by almost 10 percent compared to last year. As we enter November there are almost 20 percent fewer properties available to buyers throughout the greater Toronto area than there were last year at this time. Last year buyers had 18,926 properties to choose from. This year that number has declined to 15,375.

Another inventory concern is the availability of condominium apartments. For the last two and a half years, condominium apartments have been the engine that fuelled Toronto’s residential resale market. It was all about affordability. Notwithstanding the new mortgage stress tests, condominium apartments remained accessible and affordable. Both accessibility and affordability are fading.

In October the average sale price for a condominium apartment in Toronto’s central and downtown core came in at $748,000. The bulk of all condominium apartment sales take place in Toronto’s central and downtown core. In October this trading area accounted for almost 65 percent of all Toronto condominium apartment sales. In October we also saw a dramatic decline in new listings. New listings declined by 10 percent year-over-year, resulting in only 2,098 condominium apartment listings available to buyers as we enter November, a decline of more than 15 percent. Fewer listings, higher prices, a daunting prospect for buyers.

The higher-end of the market appears to be shaking its lethargy. As the over-all market recovered in early 2019, the higher -end of the market did not respond similarly. Over the last few months positive change is occurring in this market sector. In October 254 properties having a sale price of $2 Million or more were reported sold. This compares favorably to the 234 high-end properties that sold last October. Although the 8.5 percent increase is not as high as the overall market increase of almost 15 percent, it is a vast improvement compared to previous months.

Looking forward to the end of 2019 and into 2020, there are no economic factors at play that are likely to dramatically change the momentum of the current market. Affordability will probably adjust itself, the problem will remain supply.

Prepared by Chris Kapches, LLB, President and CEO, Broker, Chestnut Park® Real Estate Limited, Brokerage.

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Toronto Real Estate Agents

Toronto and area’s residential resale market, which I have been describing as beautifully boring over the last few months, got a lot less boring in September. Compared to last September, reported sales were up by 22 percent, but more concerning is the fact that average sale prices jumped by almost 6 percent. With salaries and wages increasing by only 3.5 to 3.8 percent affordability and substantially concerns once again get pushed to the forefront.

In September the average sale price climbed to $843,115 for all properties sold in the greater Toronto area. In the City of Toronto, the average sale price made its way to $913,096. These are the highest average sale prices recorded since the housing measures implemented by the provincial government in April 2017, and more concerning, they are beginning to approach the record high average prices reached in early 2017 that drove government intervention in the first place.

In the City of Toronto, it is now almost impossible to buy a detached or semi-detached property for under $1 Million. In September the average sale price for detached properties came in at $1,306,000 and semi-detached increased to $1,069,000. What is alarming is the rise in condominium apartment sale prices, the region’s most affordable housing type. For the City of Toronto, the average sale price came in at $636,817, however the bulk of condominium sales take place in Toronto’s central core, and there the average sale price popped to $719, 341, a record number. The sale of an average priced condominium apartment represents only 700 square feet of living space.

The 905 regions have also been showing signs of life, however they lag the prices that are approaching record highs in the City of Toronto. The average price for detached properties remains under $1 Million ($946,256), while semi-detached prices dramatically lag their Toronto counter parts, coming in at only $689,950. In the 905 regions condominium apartments, which are becoming more plentiful, are only $497,000.

No doubt the rise in average sale prices is being driven by a lack of inventory. This is particularly true in the City of Toronto. Throughout the greater Toronto area listed properties are down by over 14 percent compared to last year ——- 17,254 available properties for the entire greater Toronto area is simply insufficient supply. in the City of Toronto, the situation is becoming critical. At month end only 5,499 properties were available for sale. This translates into only 1.9 months of inventory. It is not surprising that all properties sold in the City of Toronto sold in only 19 days (including all condominium apartment sales) and astonishingly for 101 percent of their asking prices.

Given these market conditions it is imperative that the political parties engaged in Canada’s federal election not make promises that will stimulate the housing market. In particular the Conservative Party’s promise to lower the mortgage stress testing levels and increase amortization times will have a disastrous impact on the prevailing market and its longer term sustainability.

Prepared by Chris Kapches, LLB, President and CEO, Broker, Chestnut Park® Real Estate Limited, Brokerage.

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Toronto Real Estate

Happily, the Toronto and area residential resale market place delivered August results as anticipated and in a way that ensures that the resale market will remain stable, sustainable and accessible. The only concern is inventory, particularly in the City of Toronto.

Sales volumes were up by over 13 percent compared to August 2018, while the average sale price increased by 3.6 percent, right in line with the increase in wages. In August wages for permanent employees in Canada increased by 3.8 percent year-over-year. Considering that sales volumes are still playing “catch-up” from 2016 and 2017 numbers, a 13 percent increase compared to last year is modest.

In actual numbers 7,711 properties were reported sold in the greater Toronto area. Last year 6,797 were reported sold. The average sale price came in at $792,611 compared to $765,252 for the same period last year. It should be noted that the increase in sales volumes was concentrated in Toronto’s 905 region. Of the 7,711 reported sales 5,158 were primarily located in Halton, Peel, York, and Durham regions. Only 2,553 were City of Toronto properties. This number is almost identical to the 2,550 sales that took place in the City of Toronto last year. As these numbers indicate the City of Toronto made no contribution to the 13 percent increase in sale volumes across the entire marketplace.

The reason for this disparity is two fold. Firstly, the City of Toronto’s average sale price came in at $818,715, at least 5 percent higher than the average sale price achieved in the 905 region. More impactfully is the lack of inventory available to buyers in the City of Toronto.

Condominium apartment sales were practically flat in August (2.2 percent higher than last year). Condominium apartments have not only become pricey —— in the Central core of Toronto where most condominium apartments are located and sell, the average price is approximately $700,000. With mortgage stress testing a buyer of a condominium apartment would need household income substantially higher than $100,000 annually, and if their mortgage financing is high ratio at 10 percent equity, at least a $70,000 deposit. It is these factors that ultimately will keep average sale prices from increasing substantially more than 3 percent year-over-year for sometime to come, even if the Bank of Canada reduces its overnight lending rate, which its wisely refrained from doing at its meeting in early September.

Although condominium apartments are still selling briskly ——- all condominium apartment sales took place in 22 days (the rate in the overall market place was 25 days) and at 100 percent of their asking prices ——- inventory levels are down. Last year there were 2,307 active listing at the end of August. This year only 2,117. The same is true for the overall market. Last year there were 17,864 active listings available to buyers in the greater Toronto area, this year that number has dropped to 15,870, an 11.2 percent decline. This not good news for buyers, even those who have the financial means to comfortably afford Toronto real estate prices, a serious concern going forward.

The high end of the residential resale market also continued its slow recovery. In August 159 properties having a sale price of $2 Million or more were reported sold. Last year 144 were reported sold, an increase of 10 percent, a number that lags the over market place increase of 13.4 percent. As discussed in previous reports the average sale price of luxury properties out-distanced the overall market place in 2016 and early 2017. That sector of the marketplace is still correcting, however that process is now almost complete. In August the sale of detached properties (average sale of $1,246,392) increased by 0.3 percent compared to last year, one of the few year-over-year increases in the City of Toronto over the last few months.

Given some recent economic numbers there is nothing that would indicate that the prevailing resale market place will change throughout the remainder of 2019 and into 2020. As indicated above, wages rose by 3.8 percent in August; 81,100 new jobs were added to the Canadian economy, 23,900 of those being full-time jobs; and the Bank of Canada did not lower interest rates. If the Canadian economy continues to create jobs throughout the balance of 2019, we should make it to year-end with out the Bank of Canada reducing rates. All of this economic activity ensures a stable real estate market going forward, with modest increases in sale volumes and 3 to 3.5 percent increases in average sale prices.

Prepared by Chris Kapches, LLB, President and CEO, Broker, Chestnut Park® Real Estate Limited, Brokerage.

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Toronto Real Estate

As forecast, the Toronto and area residential resale market delivered its third consecutive strong monthly performance. In June 8,860 properties were reported sold, almost 11 percent higher than the 8,024 properties reported sold last year. On a year-to-date basis, 43,950 properties have been reported sold, a vast improvement over the 39,922 properties reported sold at the midpoint of 2018. At this rate, the Toronto and area residential resale market will report about 85,000 sales in 2019. Last year only 78,023 were reported sold, the lowest number of sales since 2008.

The average sale prices rose by 3 percent to $832,703. In the City of Toronto, the average sale price came in at $915,481, 10 percent higher. This is startling when it is remembered that about 50 percent of all property sales in the City of Toronto are condominium apartments, with an average sale price of only $636,000 in June.

Not only were the number of sales impressive, but the speed at which sales took place was also impressive. All properties sold in the greater Toronto area were reported sold in only 21 days. In the City of Toronto, sales took place in only 18 days. In some trading areas in Toronto, sales took place even faster. For example, all sales in Toronto’s eastern districts took place in 15 days. Semi-detached property sales in the eastern districts and there were 133 of them, took place in only 11 days, at sale prices averaging 109 percent of the list prices.

Inventory continues to be a concern. In June 15, 816 properties came to market, almost 1 percent less than the 15,876 that came to market last year. The bulk of those new listings were in Toronto’s 905 region. At month end buyers in the greater Toronto market place had 16,655 available properties to view and purchase. Unfortunately, that number was almost 6 percent fewer than the 20,844 properties available last year at this time.

Urban Researchers Frank Clayton and Eva Shi recently reported that in 2018 the population of the greater Toronto area grew by 125,298 people, second only to Dallas – Fort Worth – Arlington, which grew by 131,767. The City of Toronto grew by 77,435 people over the same period, by far the fastest growing city in North America (Phoenix came in second with a growth rate of 25,288.) All of the greater Toronto area’s growth is immigration driven.

The problem for the city of Toronto and the greater Toronto area is that this growth is not singular. It has been occurring year in and year out for more than 10 years. The compounding effect has put tremendous pressure on housing both from the perspective of availability and affordability. Having only 19,655 properties available throughout the greater Toronto area is simply not enough.

Of particular concern is the impact of population growth on the availability of condominium apartments, the least expensive housing form available to buyers. In June new listings of condominium apartments declined, both in the City of Toronto and the greater Toronto area compared to last June. In the City of Toronto, only 2,546 condominium apartments were available to buyers at the end of June, not nearly enough to satisfy the demand.

The high-end of the market continues to improve. In June 257 properties having a sale price of $2 Million or more were reported sold, almost 9 percent higher than the 237 reported sold last year. Detached homes, which represent about 90 percent of these sales, came in at an average sale price of $1,332,639 in the city of Toronto. In Toronto’s central districts the average sale price for detached properties sold was just over $2 Million.

As we move into July and the summer months we can expect softer sales. By September I anticipate that sales and average sale prices will return to the pattern established in April, May, and June. Sales will be approximately 10 percent higher than sales achieved in 2018, and average sale prices will continue to increase moderately at 3 percent.

Prepared by Chris Kapches, LLB, President and CEO, Broker, Chestnut Park® Real Estate Limited, Brokerage.

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For the second month, the Toronto and area market place produced double-digit increases compared to the same month last year. In May 9,989 residential properties were reported sold in the greater Toronto area, a stunning 19 percent increase compared to the 8,402 that sold in 2018. The recovery of the Toronto housing market is due to a number of factors.  The mortgage stress testing rules introduced in January 2018 appear to have been absorbed by buyers. More resale properties have come to market, although still not enough to create a balanced market.  And lastly, interest rates have edged downward, softening the impact of the new mortgage stress testing.

It comes as no surprise that with the increase in the number of sales, average sale prices have also continued their upward momentum, although not as dramatically as the number of reported sales. In May the average sale price came in at $838,540, 3.6 percent stronger than the $809,305 average sale price achieved last year.

In the City of Toronto, average sale prices were even stronger. The average sale price for all properties sold in the City of Toronto came in at $937,804, 12 percent higher than the greater Toronto average sale price. This is a particularly startling number when it is remembered that it includes condominium apartment sales, the bulk of which are located in the City of Toronto. Almost 70 percent of all condominium apartment sales take place in Toronto (416 region). They continue to be the least expensive housing form available to buyers, although “least expensive” is becoming a relative term.

The increase in the average sale price was driven by an increase in the number of expensive homes that sold in May. This month 293 properties having a sale price of $2 Million or more were reported sold. That compares favourably with the 243 that were sold in 2018, a 20 percent increase. Over the past two years, higher-end sales have been relatively dormant.

In May 19,386 new property listings came to market, an almost identical number to the 19,237 that came to market last year. Unfortunately, the new listings that came to market were insufficient to effectively increase the supply. At the end of May, there were 20,017 properties available to buyers in the greater Toronto area, almost 5 percent less than were available at the same time last year. As the resale market moved into June there were 2.5 months of inventory in the 905 and only 2 months of inventory in the City of Toronto.

Not only did more properties sell in May with rising prices, but all sales took place at lightning speed.  All properties sold (on average) in only 19 days.  Depending on the type of property and location, the speed of sales was even faster.  For example, semi-detached properties in Toronto’s central core sold in only 14 days.  In Toronto’s eastern districts they sold in only 10 days, at 106 and 109 percent over the asking price, respectively. Generally, it took much longer for properties to sell in the 905 region, ranging from 25 days in the Halton region to 36 days in Simcoe County. Sale in the York region took 27 days.

In May 2,542 condominium apartments were reported sold, almost 70 percent of them were located in the City of Toronto.  The average sale price for all condominium apartments sold was $648,891.  In Toronto’s central core, where 63 percent of all reported sales were located, the average sale price came in at an eye-popping $718,455.  What may be even more startling is that all these condominium apartments sold in only 17 days and at 100 percent of their asking prices.

Notwithstanding that condominium apartments are now becoming quite pricey, the supply still remains insufficient to meet demand.  At the beginning of June there were only 2,568 condominium apartments available to buyers, more or less the same number as were available last year when the average sale price was $40,000 less than it is this year. To qualify for an average priced condominium apartment in Toronto’s central core now requires a household income of substantially more than $100,000 annually and a 10 percent down payment of more than $70,000.

Looking ahead to June we can anticipate that sales will probably decline from May’s torrid pace to a more moderate 9000 sales, with the average sale price increasing moderately by about 3 percent.  Price increases in this modest range are exactly what the Toronto resale market needs in order to remain sustainable.

Prepared by Chris Kapches, LLB, President and CEO, Broker, Chestnut Park® Real Estate Limited, Brokerage.

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Toronto Real Estate

April’s housing market results clearly demonstrated that the Toronto and area resale market is strong and robust. As indicated in previous monthly reports, any sluggish behaviour by the resale market was due to a lack of inventory, and not to a decline in buyer demand.

In April, for the first time in several months, the number of new listings coming to market exceeded expectations. No doubt improved weather conditions were a major factor. In April 2017, 205 new properties came to market, 8 percent more than the 15,933 that came to market in April last year. For the first time in many months, buyers had a choice that had previously been unavailable to them. Notwithstanding this increase in new listings, by month-end, the total number of active listings available to buyers was only 18, 037 properties, still 1 percent less than the 18,206 available last year. The explanation? Absorption.

April saw Toronto and area realtors posting 9,042 sales, a dramatic 17 percent increase compared to the 7,744 properties that were reported sold last year. It is obvious that buyers were waiting for more properties to become available. They did, however, have to act extremely quickly.

In April all properties sold (on average) in only 19 days, an astounding number when it is considered that this number represents the sale of all properties in the greater Toronto area, including condominium apartments. In some neighbourhoods, the pace of sales was even faster. For example, all semi-detached properties in the neighbourhoods of Riverdale, Leslieville and the Beaches sold in only 8 days, a pace not seen since the frenzied period leading up to April 2017. In fact, all semi-detached properties throughout the entire 416 area of Toronto sold in only 10 days, and for average sale prices of 107 percent over asking.

Condominium apartment sales were just as resilient. All condominium apartment sales in the City of Toronto took place in only 17 days and for average sale prices of 100 percent of the asking price. This was also true in Toronto’s central districts were more than 60 percent of all Toronto condominium apartment sales are recorded. What is a troubling about these results is that for the first time the average sale price in the central core exceeded $700,000. The once affordable alternative housing is now becoming quite pricey in Toronto.

With sales happening at these speeds throughout the greater Toronto area, it is not surprising that the average sale price also increased In April. The greater Toronto average sale price came in at $820,148, almost 2 percent higher than last April’s average sale price of $804, 926. In the City of Toronto, the average sale price was even higher, coming in at $904,000, once again a number similar to the one that caused the provincial government to implement various measures to try to cool the resale market, including the implementation of 15 percent foreign buyer’s tax. It should be added that that number includes condominium apartment sales, which account for 50 percent of all reported sales. If condominium apartments are removed for this calculation the average sale price for detached and semi-detached property sales in the City of Toronto comes in at $1,193,000.

In April we saw some improvement in the number of higher-end sales. April saw 250 reported sales having a sale price of $2 Million or more. This compares favourably with the 233 that were reported sold last year, a 7 percent increase. These numbers were one of the first increases recorded in this price-point in some time. Although most of these sales were represented by detached properties, it is worth noting that almost 10 percent of the sales reported in this price-point were condominium apartments. Only 8 of these $2 Million or more reported sales were semi-detached properties.

It is clear from April’s data that the resale market has recovered in the City of Toronto but continues to lag in the 905 regions of the greater Toronto area. In the 905 regions sales took place at a slower pace, and average sale prices are substantially lower. As indicated earlier, the average sale price for all properties sold in the City of Toronto came in at $904,000, including condominium apartments. In the 905 region, the average sale price was only $820,000, almost 10 percent lower. Similarly, all sales in the City of Toronto took place in only 17 days and at 101 percent of asking prices. In the 905 regions sales took 19 days and at only 99 percent of asking prices. As April came to an end the 905 regions had 2.6 months of inventory, whereas the City of Toronto was reduced to only 2 months of inventory.

The looming concern in all this good news is affordability. It is exciting and invigorating to see how resilient the greater Toronto area resale housing market is, however with average sale prices approaching $1 Million in Toronto and $820,000 in the 905 regions, buying a property in the greater Toronto area may soon be beyond the reach of most first-time buyers.

Prepared by Chris Kapches, LLB, President and CEO, Broker, Chestnut Park® Real Estate Limited, Brokerage.

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Toronto Real Estate

TREB’s March results reaffirm a predicted shift in the discussion around Toronto’s real estate market. We are no longer talking about a dramatic year over year growth, but rather about the lack of supply and affordability issues from first-time buyers. The intervention of government on both a federal and soon-to-be municipal level may incite more buyers and sellers to enter into the upcoming spring market. This, in turn, may encourage more listings and more sales. This intervention, however, may not impact affordability as such intervention will increase buyer competition, while not dramatically increasing Toronto’s housing supply. The lack of inventory and the affordability issue will not be resolved until Toronto finds creative ways to cut through the bureaucratic red-tape and time delays to add more new homes.

March 2019’s marginally lower sales growth, as compared to the last three years, was due to a lack of supply in all markets. This slower growth, however, shouldn’t be overstated as the sales difference between 2018 and 2019 were negligible – March 2018 saw 7,188 sales while 2019 saw 7,187 sales. We also saw sales increase in March from February’s disappointing 5025 sales. Since we saw sales grow in January and then slow down in February (likely due to weather conditions and not a weakening market), it’s difficult to predict if sales will outpace 2018. Nonetheless, even if sales do slow, it does not necessarily indicate a weakening Toronto real estate market.

Demand for Toronto housing remains high for solid reasons. Our relatively open immigration policy, coupled with our international status as one of the best places to headquarter a technology company, continues to stimulate long-term interest in Toronto’s real estate market. This is evidenced by the fact that both the housing price index (HPI) and the average sale price still remains higher than last year. Toronto properties, including condominiums, sold for an average of $830,043 in comparison to $817,642 in March of last year. It’s important to note that, while March’s average sale price wasn’t higher than February’s sale price of $840,000, this price decline is likely a short term rather than a long-term trend. This conclusion is drawn because the HPI – a more reliable metric that smooths out the swings associated with averages – rose by 5.55% year over year for all housing types in Toronto. Accordingly, today’s prices are a lasting change in buyer’s willingness to pay to work, live and play in Toronto.

The continued price growth in Toronto was not mirrored in the rest of the regions under TREB. For example, while the HPI for the York Region declined by -1.95%, the Peel Region HPI grew by 5.01%. Nonetheless, the overall HPI for “non-Toronto-core” markets declined by -1.46%. Comparing this spotty growth with Toronto’s HPI loosely suggests that Toronto may not be completely inflated by cheap money and foreign buyers, but rather Toronto is a destination for both highly skilled workers and companies to plant their flags.

Two other metrics used to measure market conditions are days on market (DOM) and months of inventory (MOI). While the former metric is not perfect because it can be skewed by relisting a property, it is still useful in understanding how quickly real estate is moving. And it is. In Toronto, all property types sold at a relatively quick pace of 19 days. While this number is not as shocking as the 15 days it took in March 2018 to sell a property, it is still impressive when compared to other desirable markets. New York City regularly sees properties sit for almost 100 days and San Francisco sees homes sit close to 40. What is more, the MOI for all properties in Toronto remains very low at 2.0, confirming that Toronto is still in a seller’s market.

As addressed in our February 2019 Market Report, the last truly affordable housing type, condominium apartments, continued on the path of unaffordability. Condominiums in central Toronto, the place where demand remains highest, sold for an average of $673,330. This is still much lower, however than the $2,009,104 average commanded by detached homes in the same area. Given this staggering number, the activity in the mid-priced condominium market may be fuelled by necessity rather than by choice of lifestyle.

Even though the high-end property market has fewer buyers, sales continued to grow. In March 2019, 139 properties with a sale price of $2 Million or more across all TREB regions were sold. This is an improvement over the 118 sales from last month. An interesting trend in 2019 is that almost 10% of homes sold in the luxury market are condos, as opposed to detached or attached homes. The reason for condo purchases in the luxury market, however, is markedly different than the reason for condo purchases in the mid-market. High-end buyers, unlike mid-market buyers, are choosing condos because of lifestyle and not because of necessity.

As we move into the spring market, we anticipate more properties coming to Toronto’s market. These properties, however, may still be out of reach for mid-market buyers looking to live in the Toronto core. While continued low interest rates coupled with the federal government’s housing assistance plan may encourage buyers to become active in the market, this support will not be enough to improve Toronto’s affordability, thereby forcing most buyers to look to the more “depressed” 905 regions and causing a slow-down in Toronto’s year over year price growth.

Prepared by Chris Kapches, LLB, President and CEO, Broker, Chestnut Park® Real Estate Limited, Brokerage.

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