Here is my latest Toronto real estate market update for March 2018. In this month's video I take a look at what's hot, I tackle a viewer's question on investing, and I discuss where the greatest opportunities are right now.
The spring real estate market has kicked into gear, and although we are far from the overheated pandemonium witnessed a year ago, we’re nonetheless seeing spots in the Toronto real estate market that are feeling pretty toasty.
In this market update I’ll talk about where all the action and the opportunities are at, I’ll give you a quick rundown of the latest stats, and respond to a YouTube comment from the last month.
Hi I’m Rebecca Laing, and welcome to my March market update for the City of Toronto.
February and the first half of March continue to show a diminished number of sales taking place compared to the abject frenzy of last year. It’s a sizeable drop, down 30% year over year.
Many will point out that it’s unfair to compare sales volumes with last year at this time when the market was approaching its peak, but even when you compare to periods further back, the number of transactions is still down for this season.
The expanded B20 stress test is being frequently indicted as a likely culprit responsible for the slowdown in markets across Canada, although I’m not sure if we’ll see any formal data that draws the direct correlation.
Despite whether or not there is a constraint from the B20 rules, out in the field I'm finding plenty of optimism amongst buyers, and if you look at a lot of the sales that are transpiring versus what’s listed, it’s quickly evident there is still a lack of supply coming to market for what is most in demand.
This is a continuation of the theme I brought up last month, when I discussed how Toronto’s mix of housing types, neighbourhoods, and price points are performing differently from each other.
It can be simplified a bit further by saying that convenience, proximity to downtown, and lower price points are what’s hottest, while the high-end luxury homes and locations further from the core are still getting less traction.
For evidence, in taking a look at the first half of March you will see almost 2 out of 3 downtown condos selling at, or above, their list price.
Skeptics will say that it’s easy to achieve these results if the list price is artificially low and offers are held back until an offer date.
Now while it’s true that most of these new listings are setting offer dates, I don’t see too many games being played with list prices, as most list prices are still being set within a reasonable percentage of market value.
Either way, sellers wouldn’t be pursuing this strategy if it wasn’t for the 10-20 offers that are being generated in some of the resulting bidding wars.
Yes, whether you’re talking King West, The Distillery, or Regent Park, some fairly typical downtown condos are attracting multiple offers.
Many draw a dozen or more competing buyers on offer night, and there are even some listings that are only out there for a day or two before they get scooped up by a pre-emptive bully offer.
Although this isn’t necessarily happening for every condo, it is still very much something for which to prepare and strategize if you are thinking of purchasing downtown, especially under a million dollars.
Now while you hear me mention downtown condos quite a bit, to be fair to other areas, condos in convenient locations throughout the city are also performing very well.
From Willowdale in North York, down to Islington and Bloor in Etobicoke, out to pockets in Scarborough, it’s still a moderate sellers’ market with only 1-2 months of inventory, sale prices averaging at list, and benchmark values up over 20% compared to last year.
As far as houses go, from the east end neighbourhoods of Leslieville, The Beach, Riverdale, across downtown and into the west end neighbourhoods of Parkdale, Rocesvalles, and some of High Park, things are quite lively, with low inventories of good homes, and sale prices coming in even higher than they would have last year at the frothy peak.
Leslieville and Riverdale are particularly noteworthy for the serious underpricing that’s happening. In multiple instances thus far in March, list prices of around $900,000 are translating into sale prices of $1.2 to $1.4 million.
With all of today’s challenges around mortgage qualification and appraisals, it’s now more important than ever that for successful navigation of hot neighbourhoods like these, it takes not only careful guidance from an urban Real Estate Broker, but also matching expertise from a financing guru.
I’ll show restraint right here by not inserting a shameless plug for me and my supporting team of professionals, but I’m sure you get what I’m saying.
Switching focus to what’s running cooler, though I said earlier that it was mostly at the higher end, I must clarify that high-end is a relative term that is neighbourhood dependent.
For instance, there are modern, respectably designed newish homes in parts of East York and Clairlea in the $1.2 to $1.6 million range that are moving at quite a slower pace than their entry-priced neighbours, and are still selling at prices lower than they would have a year ago.
The same can be said about newer builds in parts of midtown, up through Bedford Park, all the way to Willowdale and beyond.
The difference in these communities is that higher end price points look more like $2.5 to 4 million.
Now if you take that $2.5 to 4 million range but shift focus right to the core in and around Rosedale, $2.5 becomes almost entry level, and demand is keeping up with the limited supply of new, under $4million listings.
When you look to the 5-plus million dollar range, the current selection is taking its time to sell, but that’s often the situation anyway.
Now my point in discussing this is not to make this into an analysis of luxury properties that are outside the purchasing capacity of most buyers, but instead to highlight where the greatest opportunity is right now, and that is for move-up and move-out buyers.
Making the move-up within the same neighbourhood has become more achievable given the greater demand for move-in ready homes at lower price points. If you’re coming from a condo, there’s the added bonus that in all likelihood your condo’s value has converged over the past year with the prices of houses you might consider, making the jump up to a freehold home relatively more affordable.
And if your scope extends beyond the borders of Toronto into the 905, the selection for the move-out-of-the-city buyers really starts to look good.
Price spreads versus the city proper have widened since a year ago, and there are opportunities such as an under a million dollar Newmarket home that I showed this week that is now available for $300,000 less than it sold for a year ago.
This might have you wondering if I’ve suddenly become a champion of the burbs, but while my focus and personal preference is still focused within the city, I have to admit that for clients whose lifestyles are conducive to 905 living, the price spreads and selection are understandably enticing.
There's always the perennial question of whether the burbs is such a great deal if your work and social life are centred in the city and all your time and savings will be consumed by commuting , so there's some lifestyle and financial analysis we should work through before you commit to giving up a walkable neighbourhood in exchange for Go Trains and 407 transponders.
Moving on to the latest sales stats, let’s do a quick rundown of February’s numbers.
For detached homes, the average sale price was $1,282,240 which is down a whopping 18.5% compared to last year, and flat since the start of 2018.
Before fainting from this seemingly huge drop in the average sale price, keep in mind once again that a good chunk of this decrease is attributable to the fewer number of high-end sales.
Supporting this is the comparatively small drop in the HPI, with the Home Price Index benchmark price down only 1.5% compared to 2017.
The detached benchmark also showed a small uptick since January, up 0.8%.
As for semi-detached homes, the average was $985,902, down 9.1% vs. last year.
Interestingly, it’s the hot east end, central, and west end neighbourhoods that I mentioned earlier that saw the biggest drop in the average sale prices for semis.
Again, some of this has to do with the composition of what has been selling, but I also suspect that a portion may also be attributable to a readjustment of buyers’ expectations of the price gap between detached and non-detached.
Looking now at condo townhouses, they came in at $705,816, up 18.3% over last year, and making up for last month’s substantial dip.
Finally, the average sale price for condo apartments was at $570,275, up 10.6% over last year. While these gains are not as sizable as previous months, the HPI benchmark is still showing an increase of 20.9% year-over-year across the city.
Before wrapping things up for this month, I want to highlight a question posted on YouTube by a viewer named Ellen.
She asked whether I thought it was a good time to invest in a small downtown condo, and whether I thought this segment had reached its peak.
The make-money-fast-wealth-building real estate infomercial seminar response is that it’s always a great time to buy and you definitely should invest. But of course, MY response wasn’t so simple.
I had to preface by saying that I'm really not into trying to predict market timing, as I’ve yet to find a crystal ball that’s useful for anything other than staging a sorcerer’s living room.
With that said, my prediction for small downtown condos is they still haven't reached their peak, for all the reasons that this segment continues to sizzle right now.
In January’s video, I talked probably way too much
about the impending sources of additional condo supply, and how given current demand by renters and end-use buyers is not showing any sign of abating, this supply should be absorbed pretty readily, and without upset to recent price gains achieved.
As for risk, although mortgage rates are now looking more stable for some months to come, there’s still a slew of other macro-economic factors that analysts from all over,
feel could deliver a wallop to real estate markets across Canada.
While I’m not saying that an individual investor should become hung up by these external factors outside their control, they ought to be at least part of the process of figuring out one’s personal risk tolerance.
Other prudent steps should at the very least also include determining one’s investment goals, expectations, and capital availability both at the outset and throughout the life of the investment.
One last nugget of wisdom I’d like to share is courtesy of nearly every mutual fund advertisement, and that is that “past performance is not an indicator of future results” . Whether you’re lined up at a builder’s showroom like I described in February’s video, or considering a resale downtown condo, or debating between buying shares in Apple or a cockamamie crypto currency involving virtual kittens,
this one line is a good one to keep in mind as you prepare and execute any investment strategy.
And with that, I’m going to wrap things up with a reminder to get in touch with me with any of you real estate questions, whether it’s about moving up, out, down, or investing.
You can reach me directly by phone or text at 416.357.1059, or online through rebeccalaing.ca.
Please don’t forget to like and comment on the video below.
And if you’ve made huge coin and bought a yacht thanks to your investments in CryptoKittens, then I definitely want to hear about it in the comments.
Thanks again for watching, and until next time, I'm Rebecca Laing, Toronto Real Estate Broker.