Below is my latest Toronto real estate market update video for September 2017.
Are buyers really back?
Is a major influx of new listings happening now that it's the fall real estate market?
Are the latest home sales stats a sign of the downturn slowing down?
What does one of the giants in global financial analysis say about where might Toronto home prices be heading in the coming months and years?
I touch on these topics and more. And since the mid-September weather feels like the June we never had, of course I'm at Woodbine Beach.
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, with my September market update for the city of Toronto. Labour Day marks the start of Toronto’s fall real estate market, with September traditionally showing strong performance after a seasonal summer slowdown. Industry insiders and consumers alike are watching for signs of our market regaining traction, and even the Globe and Mail is stoking optimism, with its headline last week proclaiming that "Toronto buyers are back”. As far as this headline goes, I find it wanting on two levels. First, it wasn’t like buyers had completely disappeared. Despite the lower sales in recent months, there have still been sufficient buyers to keep Toronto well ahead of other Canadian cities when it comes to the ratio of sales to listings. Second, I’ve certainly not seen any signs of speculative short-term buyers returning to the market, who are the ones I suspect were contributing disproportionately to earlier market frothiness. Since MLS sales activity so far in September is still a bit tepid, instead of proclaiming that buyers are back, I would say that we are anecdotally seeing increased buying signals and more confidence from end-users who are looking to either purchase their first home, make a move-up, or downsize.
Keeping in balance with the relaxed perspective of buyers are homeowners who are not in a huge rush to list their properties. There was definite concern during the summer that a flood of listings would come to market in September. While the number of active listings is creeping up since the end of August, thus far it is only by a few hundred properties, which is far from concerning. Overall, I would say it looks like we are getting closer to finding balance.
You might be wondering what balance might look like for the Toronto market over the coming months and years. Moody's Analytics, which is part of the global financial rating firm, just released a report that forecasts price declines for the vast majority of Canadian cities, with the very notable exception of...Toronto! Moody's expects Toronto prices to increase at an annualized rate of 10.7% between now and next June. And although they feel that Toronto real estate may currently be overvalued, because of the rate of household formation, limited supply growth, and other market dynamics, they forecast that up until 2022, Toronto will experience an average increase in prices of 7.7% per year. While this is well shy of the double digit increases we have seen in recent years, this is a healthy, yet not too healthy, rate of appreciation.
Moving on to the actual sales numbers, in last month’s video I mentioned how I wouldn’t put too much weight on summer stats as indicators of market performance. That said, when we dig into August's results, it appears that the recent downturn is slowing. For the month of August, the average sale price for all homes types in the City of Toronto was $726,712, which is up 7.3% compared to August of last year. In regards to the number of active listings, it was 4743, up 10.8% compared to August of last year, and down 16.8% compared to July of this year. This is the second consecutive month that the number of active listings has dropped, and whether you divide the active listings by this month’s sales, or the 12 month rolling average, it represents less than 2 months of inventory. As I mentioned earlier, 2 months is not a lot of inventory compared to most cities, and this rate of absorption is a good sign. Moving on to prices for each housing category, for detached homes across Toronto it was $1,191,052, which is a 1.3% decrease compared to last year. While average selling price is down, when you look at the Home Price Index for detached houses, you’ll see that it is up 8.15% compared to last year. The higher HPI is an indication that buyers are placing an increased value on the various underlying characteristics that comprise a home. Thus, while the average is being skewed downwards by the composition of the detached homes sold last month, the HPI shows that the intrinsic value is still higher. Moving on to semi-detached homes, the average was $895,361 up 15.6% over last year. Condo townhouses were at $597,290, which is up 8.8% compared to 2016. And finally, the average for condo apartments was at $540,169, which is a gain of 20.9%.
In what has become a trend, market performance is being led by the condo segment, and in particular condos located downtown. The average downtown condo is up over $120,000 compared to last year, and the supply of listings remains low. As I highlighted last month, if you are a condo owner yearning for a garden, or otherwise thinking of making the move to a house, this is a great time to capitalize on the appreciation of your condo, and further benefit from the cooler market for houses. Better yet is if you can hold onto the condo and rent it out. The demand for 1 bedroom downtown condos rentals is seemingly insatiable right now, and $2000 per month has become a typical rental price. Even in neighbourhoods like Liberty Village that have no shortage of condo towers, when a 1 bedroom rental listing comes on the market, we are seeing 5 or more competing offers within a day, at prices over asking. The bottom line for current condo dwellers is you are likely in a good position. Feel free to get in touch with me to ensure you are best taking advantage of the current market dynamics.
Switching to the topic of mortgages, we are still waiting on word from the Office of the Superintendent of Financial Institutions about the expanded stress test for all mortgage borrowers. You can check out my July video for more on this topic, but the signs are still pointing to a likely announcement this fall. As far as mortgage rates go, the Bank of Canada recently increased its benchmark rate to 1%. This is of course in response to the strength in the Canadian economy, as evidenced by increasing GDP and healthy rates of employment. While this increase triggered an immediate increase in variable mortgage rates, fixed rate mortgages are more insulated from this increase. As a result, there are still some very good fixed rates that lenders will hold for potential home buyers. Contact me for more info on how to get a great interest rates held for your own possible purchase.
And on that note, please don't hesitate to reach out with any of your real estate questions. You can call or text me directly at 416.357.1059, or connect with me through rebeccalaing.ca. Once again I’m very grateful for all the views, comments, and thumbs-up for my previous videos. If you’re watching on YouTube, please subscribe, give me a thumbs up at the bottom right of the video, and leave a comment. I really appreciate the interaction, and I’m very interested to hear your feedback and perspectives on the market. Thanks again for watching, and please be sure to get out to enjoy these summer-like September days. Until next time, I'm Rebecca Laing, Toronto Real Estate Broker.