Here is my latest Toronto real estate market update for October 2018 In this month's report, I take a look at three recent news stories, I touch on what's happening on the market right now, I recap Toronto Real Estate Board's September sales stats, and I'm accompanied by a photo-bombing calico kitty who's completely unimpressed with it all.
How does this report affect your own situation? Need a professional guide to help you on your journey through the Toronto real estate market? Get in touch with me anytime at 416-357-1059.
Hi, Rebecca Laing here with my Toronto real estate market update for October. I’m going to kick things off with a look at 3 news items, and follow that with some analysis of the latest market stats. The first item actually relates to market stats, specifically, the publishing of individual home selling prices. After the years of legal wranglings between TREB and the Competition Bureau, in the coming months you will see increasing numbers of legitimate websites where you will be able to view how much any particular home sold for on the Toronto MLS. Sites that are following the rules for the distribution of this data will require you to obtain a password and login, and once you’re logged in, you’ll be able to see sale prices going back the last couple of years, as well as the most recent sales for homes that are sold firm, but have not yet closed. Meanwhile, Realtor.ca will not require a login, but will only display sold prices for homes that have fully closed. While many consumers have been clamoring for years to have access to this data, other folks have been asking me how to prevent the price at which they bought or sold from becoming public knowledge. Some people just don’t want their coworkers, neighbours, exes, or frenemies to know how much they just paid or pocketed. In order to hide a home’s sale price, the first step a seller would need to do is NOT list the property via the MLS. It could be listed exclusively through a Realtor, or offered privately with a sign in the yard, but if it is going to appear on the MLS, then MLS rules require that the sold price be reported once the sale is firm. The second step needed is for the buyer to arrange through their lawyer, well in advance of closing, that all land transfer taxes are prepaid to the government. While the first step prevents the sold price from appearing on most public and Realtor websites, it’s the second step that keeps the sold price from displaying on the land registry system, which has always been publicly accessible to those who really really wanted to find out a sold price. For those who want to make use of this newly available data, I'll be posting a video in the near future where I demonstrate how to access and utilize it. The second news item is quick mention of NAFTA, seemingly rechristened by Trump as the USMCA. Combining the current health in the Canadian economy with the immense strength in the US economy with assurances that having this newly settled trade agreement brings, it means that mortgage interest rates are almost destined to rise later this year, and into 2019. If you are even tinkering with the thought of buying in the coming 6 months, get in touch with me to connect you with a mortgage expert who will arrange an interest rate hold that is best suited to your potential buying plans. If you happen to already have a mortgage, and it is coming due in the next year, it would also be prudent to meet asap with a mortgage pro who can map out your financial situation, and help you determine whether it might even make sense to switch out now in order to take advantage today’s relatively low rates, instead of waiting until renewal. The third news topic is déjà vu, and reinforces what I’ve discussed in previous videos about buying pre-construction. We have, yet again, another major condo project cancellation in Vaughan. This time it was Icona, with over 1600 suites being shelved, and the developer citing an inability to obtain satisfactory financing as the reason. In reality, the underlying reason for cancellation may be a contractual issue that arose when the Icona developer bought the land from another party. Regardless, those who took part in the 3-day feeding frenzy that occurred when this project launched have now had their deposits refunded, many of them may now get caught up a in class-action lawsuit against the builder that could take who knows how many years to resolve, and they have all missed out on perhaps over 20% in market appreciation had they instead bought resale, or gone with a different project. Remarkably, the Icona buyers are probably envied by other pre-con buyers who purchased in a couple of developments sold by another, less experienced developer with projects in Scarborough and Durham. A recent Star investigation describes the frustration of buyers who purchased into one sold-out project as far back as 2014, and have yet to see any signs of construction. With a myriad of lawsuits underway, and escalating GTA construction and development potentially pushing these projects beyond financial viability, my guess is that it is just a matter of time until these buyers are also refunded their deposits, after having missed out on easily $100,000 or more in market gains. In summary, there are 4 takeaways from this topic, which I’ve said before, and will probably be saying again when there's another pre-construction fiasco: Pre-construction contracts have ways out of the contract for the builder. If a project becomes unviable, the project might be cancelled years after the buyer puts downs huge amounts in deposits, and there will be no compensation for the tens or even hundreds of thousands of dollars in foregone market appreciation. Because of my previous point, pre-construction buyers need to be aware that an enormous amount of risk is transferred from the builder to the buyer at the time of signing the contract. Buyers are not only acting as financiers to the builder, they are essentially also recipients of a put option written by the builder, like you would find in derivatives trading. With the first 2 points in mind, it’s critical to evaluate a developer’s character, integrity, and track record before purchasing into a project. As they say, buy the builder, not the building. Reputable, established developers charge a premium for their projects, and it’s for good reason; they’re just not in the habit of staking their reputation on poorly planned or executed projects. And number 4, have a Realtor involved in the process from the outset who can not only help you navigate these pitfalls, but who also has a legal duty to help protect your interests. It’s important to note that I’m not talking about a rep or Realtor who been hired by the builder, I’m talking about your own Realtor whom you hire and who represents your interests as a buyer, even though they are still compensated by the builder. A final point I’d like to add on is that because of increasing numbers of consumers who are affected by project cancellations, there is pressure on the provincial government to better protect buyers. A bold disclaimer on the first page of every builder contract that requires buyers to acknowledge that a builder may cancel the project at any time without recourse could be something simple to enact. However, if the government does something more substantive, watch out, as increasing regulations could further drive up developer costs, and tilt the market even more in favour of established developers who are better able to mitigate risk. Without an offset to the other increased costs that GTA developers are currently experiencing, or a quelling of condo demand, both new and resale condo prices could be driven even higher. Moving on to how the market is performing, the first month of the fall market continues the course we have seen witnessing for the past several months. Once again, the closer the neighbourhood is to downtown, and the closer the price is to being at the entry level for the neighbourhood, demand and prices are higher. Looking at what’s happened so far in October for houses in the core, which for this purpose I’ll call from The Beach across to Swansea and up to St. Clair, most are selling within a week of listing, at an average of 13% over asking. There was even a $3 million home in Little Italy that went for more than $300,000 over ask. Now if you include in the mix high-end luxury sales, and houses that aren’t priced for bidding wars, the average October sale price is still running at 9% over asking thus far into October. In stark contrast, and still within the 416, we have more $2 million+ North York homes on the market, listed for sale right now, than have even sold in the last year, clearly putting this segment into a strong buyer’s market territory. Switching to condos, while we still see the downtown neighbourhoods performing quite well, with benchmark prices up almost 14% compared to last year, condos in many Toronto neighbourhoods outside of downtown are not far behind, with some east and west end communities witnessing benchmark increases of as high as 22% over last year. As you can see, it’s important to keep in mind that the Toronto market continues to be quite segmented when you look at stats for the city of Toronto as a whole, which I'll run down right now. Starting with total number of sales in the 416, it came in at 2453, down 1.4% compared to September 2017. Given that September 2017 was pretty abysmal, dropping another 1.4% year over year isn’t great. However, what’s not so bad is also what’s more important, and that is the ratio of sales to active listings, which gives the months of inventory. September 2018 overall months of inventory was at 2.37 vs 2.30 in 2017, which are both signs of an overall market still somewhat in favour of sellers. October listings levels are creeping slightly upwards, but we are just coming out of a long weekend, and this is typically expected. On that note, I’m actually seeing some pretty good homes coming on the market right now, so if even if you’re not thinking of buying for some months, now is a great time to go out and get a sense of what options can come available. Moving on to prices, for detached homes across Toronto the average sale price was $ $1,342,363 which is down just under 1% compared to last year. Meanwhile, the Home Price Index benchmark for detached is running the opposite by showing a 1% increase over 2017. Either way, detached homes prices are looking pretty flat overall compared to a year ago. As for semi-detached homes, the average was $995,951, up 6.5% vs. last year. The HPI benchmark is showing a slightly lower increase, up 3.98% over 2017. For both semis and detached, it’s those core neighbourhoods that I mentioned earlier from The Beach to Swansea that are largely pulling these stats to the positive. Looking at condo townhouses in the 416, they came in at an average price of $ $668,285, up 9.8% over last year. Finally, the average sale price for condo apartments was at $615,582, up 11.1% over last year. The HPI benchmark is also pretty much in line, at an 11.5% increase. Whichever way you look at it, Toronto condos are still performing very well. As usual, I won’t dive into the GTA stats, but let’s just say that with continued weakness in suburban freehold prices, the opportunity is greater now more than ever to make the move from a city condo to a detached or semi with a yard. Better yet, you may not even need to go very far into the 905 to make this move a reality. Get in touch if this sounds at all enticing. And with that, I’m going to conclude this market update. I hope you found it informative, and as always, if you ever need answers to a real estate question, or if there is opportunity for me to assist you or someone you know with making a move in or out of the Toronto housing market, please get in touch. You can reach me directly by phone or text at 416.357.1059, or online through rebeccalaing.ca. Have a great rest of October, and by for now.