Toronto Real Estate: Signs of Recovery?
Toronto Real Estate Board (TREB) released their monthly Market Watch Report; with 7118 sales reported in October, the market has been showing signs of recovery. There is usually an increase in sales from September to October, as the fall real estate market picks up. This year; sales rebounded almost 12%, which is above the average increase from September to October.
“Every year we generally see a jump in sales between September and October. However, this year that increase was more pronounced than usual compared to the previous ten years. So, while the number of transactions was still down relative to last year’s record pace, it certainly does appear that sales momentum is picking up,” Jim Syrianos, President, Toronto Real Estate Board
Declining Sales, Rising Prices
This has been the trend since the Ontario Fair Housing Plan was implemented. The implementation of this act resulted in buyers sitting on the sidelines, to analyze the impact on the markets. For October, year over year sales were down 26.7%, while new listings are up 11.8%.
Active listings spiked 78.5%, and the average Days on Market (DOM) is also up 43.8% – these numbers indicate that the demand for homes have been weaker, compared to a year ago. Despite the weaker demand, average year over year prices rose 2.3% to $780,104 (for all home types). For the context of the current market conditions, average prices rose 0.58% from September to October.
Condo Prices Rebounded the Most
The average Condo in the Greater Toronto Area is now $523,041 – a 21.8% increase, year over year. This continues the trend we’ve been seeing this year – where condo price growth have been outpacing its low rise counterparts (such as townhomes, and detached homes). From September to October alone, condo prices increased 0.51%.
Townhomes & Semi Detached Homes: Second Largest Price Gains
Townhomes, and semi detached homes also showed an above average year over year price growth. The average townhouse in the Greater Toronto Area sold for $629,507 – a 7.4% increase, year over year, and the average semi-detached home sold for $764,293 – which translates to a 6.3% year over year price increase.
Detached Homes: Declining Sales, and Prices
Detached homes continued to show some signs of weakness; the average year over year price declined 2.5%, to $1,008,207. Unlike other home types, detached home prices declined 0.68%, month over month.
One year ago, Toronto detached homes were dominating the headlines; where prices continued to shatter records, and homes being snapped up in less than a week. Fast forward to one year later, it has been the complete opposite. All other home types have outpaced the price growth of detached homes.
This also raises a question: are buyers changing their real estate expectations? Demand appears to be shifting away from detached homes. Out of all home types, detached home sales declined the most (with a 29.8% decrease for the Greater Toronto Area region). On the other hand, home prices for other home types increased, and the decline in sales was not as severe.
As seen in the recent stats, there have been minimal bidding wars, especially among detached homes. Real estate agents are no longer able to use the strategy of listing the house below the market value, to incur a bidding war. This can also signal that buyers are shifting away from the double car garage, 4 bedroom detached home craze.
Buyers are still sitting on the sideline, to see where the market is heading off to. Buyers are also keeping an eye out on the regulatory changes, such as interest rates, mortgage rules, and government measures to ‘cool’ down the housing market.
Similar consumer behaviour happened in Vancouver – when their foreign buyer tax was put into place. In the case of Vancouver, prices and sales declined initially, and rebounded back to record levels within less than a year later. It appears that Toronto is on the similar path, with larger than average October month over month sales growth. With stricter mortgage rules coming soon, and increases in government regulations, will this path be deterred?
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Writer: Jelani Smith
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