Here is my latest Toronto real estate market update for August 2017. Whether you call it a correction, slowdown, or rebalancing, house prices continue to come off their peak, while condos are doing more than their share to keep the market moving. Although the months of July and August are generally slow in the Toronto market, there's still lots to discuss, including a current opportunity for downtown Toronto condo owners. And the only ducks in this month's video have actual feathers and enjoy swimming amongst the sailboats at Ashbridge's Bay Yacht club.
If you are wondering how this market report affects your situation, connect with me at 416.357.1059
Hi everyone, I'm Rebecca Laing, Toronto Real Estate Broker. Welcome to my August market update for the city of Toronto. What we are seeing in the market is largely a continuation of what I reported a few weeks ago. Toronto home buyers are taking a cautious approach, which is resulting in fewer transactions, and a further decline in prices.
There are notable exceptions, particularly the downtown condo segment, which is performing quite differently than the rest of the market, and is providing a unique opportunity for one category of Toronto homeowners. I’ll tell you more in a few minutes.
On the selling side, home seller activity has also backed off a bit, with fewer new listings coming to market this July compared to the surge that we witnessed in the previous couple of months. Sellers coming to market still have to compete to get noticed amongst many other listings, thereby making house preparation, staging, marketing, and the right pricing strategy absolutely critical to success. Amongst those sellers who are unsuccessful at first, we are seeing a greater rate of listing terminations. While some of these sellers are relisting at a different price, others are adapting their plans, and are likely to relist when they hopefully see market activity picking up in the fall. Mid-September is when there is normally a large wave of new listings, and this year the big question will be whether this effect is accentuated by sellers who have been waiting through the recent pause in activity, holding out for what is traditionally a better time to list.
On the buying side, buyers now largely have the luxuries of time, ample selection, and no competition when shopping for a home. However, there are still certain neighbourhoods and circumstances that warrant offer dates, and the bidding wars that follow. That's right, in the month of July, 80 out of the 827 houses sold in Toronto, sold for at least 10% over their list price. This is in stark contrast to the misperception amongst some buyers that because GTA average prices have dropped significantly from their peak, there is a huge discount attainable from any given list price. The reality is that list prices are all over the map, with some sellers still aggressively underpricing, while others are in line with the most recent sales, and while others cling to the unrealistic peak prices of months ago. As always, it takes some expert guidance to navigate the complexities of the Toronto market.
In regards to the most recent stats from the Toronto Real Estate Board, I must preface them by saying that the months of July and August are generally not very good indicators of market performance. There is always some seasonality at play in the summer, illustrated by lower sales volume and weaker prices than what we typically see in the spring and fall markets.
That said, let's take a look at the latest Toronto Real Estate Board statistics from the month of July. The average sale price for all homes types in the city of Toronto was $759,441, which is up 10% compared to July of last year. In regards to the number of active listings, it was 5700, up 15.6% compared to July of last year, and down 5% compared to June of this year. While this small month-over-month dip in number of listings is interesting, I'm not going to delve into the months of inventory it represents, as that stat isn't very useful given that it requires either the current month's seasonally low sales number, or the deceptively high 12 month rolling average sales number as the denominator.
Moving on to the average selling prices for each category of home, for detached homes in the City of Toronto, it was $1,304,288, which is an 8.4% increase compared to last year. For semi-detached, the average was $869,227, up 1.6% over last year. Condo townhouses were at $610,357, which is up 18.7%. And finally, the average for condo apartments was at $532, 502, which is a gain of 24.7%.
In terms of the HPI, the composite index for the City of Toronto is up 18.4% compared to July of last year. I'm not going to dwell too much on the HPI this month, as the mere mention it seems to upset some of my viewers, however I will point out that this is the first month this year that the HPI for condo apartments hasn't increased compared to the previous month. The condo apartment HPI actually dipped 1% compared to June, and although it's still up over 29% compared to last year, the dip is surprising given how well condos have been holding up.
In fact, in terms of new condo sales, the most recent stats show that a new record was set in the month of June for the number of brand new condos sold. The Building Industry and Land Development Association reported nearly 5500 condo apartment sales, which is more than double the 10 year average. This is a massive number, and while it’s attributable to several factors, it reinforces that there is still investor confidence in the long-term strength of the Toronto market, and continued demand for affordable housing at entry level price points. This high demand at affordable price points has been very evident in the low vacancy and multiple offers for downtown condo rentals this year.
If you're up for an interesting read on how these rental rates are a sign that current condo prices may be undervalued, check out the August 2nd post from the smart folks at betterdwelling.com. Essentially, they make a statistical argument for either rents to drop significantly, or condo prices to increase by the end of the year. Given the high demand and low supply for rentals, I personally don't see any market dynamic that is likely to lower rent prices. Thus, following the betterdwelling model implies that we may be headed for even higher condo prices in the near future.
Even if condo prices don’t increase, we still have a great opportunity right now that I had hinted at earlier. Downtown condo demand is solid, and there were actually 6-28% fewer downtown condo listings in July than there were last year, depending on the neighbourhood. If you currently own a downtown condo, but have always wanted to move up to a house, here is your chance to take advantage of the disparity in the market. You might be able to sell your condo for more than you expect right now, and negotiate an affordable price on a detached home that has been hit hardest by the market changes. It is still a sellers’ market for downtown condos, but more of a buyer's market for much of the freehold home selection. Get in touch with me to find out what your downtown condo may be worth, and how to capitalize on this opportunity.
Switching to the topic of mortgages, I had mentioned last month that the Office of the Superintendent of Financial Institutions is considering expanding the mortgage stress test to all mortgage borrowers, no matter the size of the down payment. While this proposal is currently still open for public feedback, the word on the street is that the expanded stress test is likely going to happen sometime in the fall. Check out my July video for more on this topic.
In other mortgage related news, if you are at all contemplating buying a home in the coming months, I strongly recommend that you have a mortgage rate hold in place. There are still excellent fixed rates available, but given the strengthening US economy, it might not be long before we see another round of mortgage rate increases triggered by increasing yields in the US bond market. It takes minimal effort to get a rate hold, and it could end up saving you thousands of dollars over the course of your eventual mortgage. Get in touch with me for more guidance on how to get this in place.
On that note, please don't hesitate to get in touch with me with any of your real estate questions. You can call or text me at 416.357.1059, or connect with me through rebeccalaing.ca. I'm always happy to speak with my viewers.
If you enjoyed this video, please subscribe and give it a thumbs up at the bottom right on Youtube, or leave me a comment. I really appreciate the interaction, and the last few months I've been blown away by the number of views, new subscribers, and lively comments.
Thanks again for watching, and enjoy the rest of August. Until next time, I'm Rebecca Laing, Toronto Real Estate Broker.