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.
Chris Kapches, LLB, President and CEO, Broker
Chestnut Park 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.
Chris Kapches, LLB, President and CEO, Broker
Chestnut Park Real Estate
The Toronto real estate market is on fire, both when it comes to prices, and in terms of sales. Exciting new trends in the condo segment are shaping up, and seasoned agents are more important allies than ever. We’ve reached out to Kristen Duern and Dylan Donovan, who specialize in condos and the luxury segment. They’re both sales representatives for the Chestnut Park Brokerage, and they were kind enough to give us the inside scoop on Toronto’s evolving market.
Kristen Duern: I have been involved in real estate for more years of my life than not. In my 32 years, I have worked in some capacity in real estate for more than half my life. I was introduced to the industry when I was young, as I had a family member working for a developer. That gave me the opportunity to start with small jobs. I have worked my way up to where I am today.
My focus over the last 10 years has been on the luxury condominium sphere, where I have successfully managed and sold one of the most prestigious hotel-condominium buildings in Toronto, the Shangri-La.
I am so fortunate to have had the opportunity to meet many incredible clients from all over the world. I have gained a breadth of knowledge and experience to understand each step of new development, international business dealings, and the intricate workings of the Toronto real estate market.
K.D.: We are in a very vibrant market, which is changing by the day. Each sale in Toronto is setting a new bar. With the lack of inventory of homes in the city, we are witnessing the condominium market rival houses. It used to be rare to see multiple offers on condominiums, now it is a common occurrence.
In the luxury marketplace, we are seeing larger high-end condominiums selling faster and for higher prices as well. The lack of inventory of large homes is pushing buyers to consider condominium living; however, their lifestyle requires large Two-Bedroom-plus-Den or Three-Bedroom suites.
There are not many buildings in Toronto which cater to these buyers, as most consist of small units, with inadequate room sizes. Buildings such as the Shangri-La, the Ritz Carlton, and the Four Seasons are some of the only choices which provide spacious suites, assisting in an easier transition from a home.
Dylan Donovan: A fair amount of the clients we work with are migrating from the suburbs to the downtown core. After many years living in the suburbs, they are switching their priorities to be more lifestyle orientated.
Living downtown allows more opportunity to enjoy a wider variety of entertainment and cultural offerings. Being closer to the ballet, opera, theatres, sporting venues and restaurants has become a big component of why we have people moving downtown.
K.D.: Typically, clients purchasing at the top end of the market are looking to find something turn-key and move-in ready. They would rather spend more on a property in which they can visualize moving right in, instead of having to worry about the added time and worry of designing and renovating. Many of our clients walk into a property and want to purchase it as is, including all the furniture, art and accessories.
D.D.: One of the biggest demands we have now is for larger condos that offer a comparable amount of space to living in a house, but without all the maintenance and hassle that comes with a single-family home.
Our clients who are downsizing to a condo are focused on prioritizing an increased lifestyle standard, but are used to a certain amount of space, which can be tough to find in many buildings throughout the city.
D.D.: Both renting and buying can be great options. Often we find that clients unsure of the amount of space they might need start out with renting. This way, they determine the amount of space they need before making the decision to buy.
For clients coming from a house, it can be daunting moving into a smaller condo, but more often than not we find they overestimate the amount of square footage they need. Living in a downtown condo is more focused on lifestyle, as opposed to individual space, and people spend more time outside of the property than they might in a suburban house.