As we begin 2019 property prices in the City of Toronto remain stable. For the month of December the average sale price for all properties reported sold in the City held up well, coming in at $762,627, a modest gain of 2.8% from December 2017 when the average sale price was $741,684.
The average sale price for all of 2018 came in at $835,422 almost unchanged from 2017’s $834,138. While average sold prices remain similar to 2017, there has been a significant drop in the number of properties sold in the City in 2018.
In December only 1,473 property sales were reported in the City of Toronto. This is the lowest number of December sales since the 2008 recession and is also a 25% decrease from last December when 1,970 properties sold.
The total number of sales for 2018 was 29,863, a 15% decline from the 35,000 plus sales recorded in 2017, and 27% fewer than the 41,126 sales reported in 2016.
In 2016 mortgage interest rates were half of what they are today, and borrowers did not have to qualify subject to rigid stress testing rules.
Luxury property sales over $2 Million have been following a similar pattern. In 2018, only 1,309 luxury houses sold, down 29% from 2017 when 1,849 high-end homes sold. However sold prices remain relatively stable with an average sale price of $2.93M in 2018. This is only a 1.7% decline from 2017’s average sale price of $3.16M for a luxury house.
Luxury condominium sales over $2 million have remained virtually unchanged in year over year comparison of both sold prices and sales volume. The average sold price for a luxury condo is $2.915M only a slight 1.3% decrease from 2017 when it was $2.953M. Similarly in 2018, 160 luxury condo units sold as compared to 158 units that sold in 2017.
Clearly these higher borrowing costs and the new stress testing measures implemented at the beginning of 2018 are keeping prices from rising.
However, the landscape for resale housing remains fractured. It could be argued that these flat numbers are due not only to higher borrowing costs and the stress testing measures, but to a lack of supply. In December only 1,426 new listings came to market. Last December 2,139 new listings came to market, a decline of over 33%.
Heading into 2019 there were only 3,270 properties in the City available for buyers, a decline of more than 12.5% compared to the 3,736 properties available at the same time last year.
These inventory levels mean that there will be neighbourhoods, particularity in the City of Toronto, where demand far outstrips supply. This was evident in Toronto’s eastern neighbourhoods, (Riverdale, Leslieville, Beaches), were even in December all properties reported sold generated sale prices exceeding their asking price by more than 100%.
Semi-detached properties in these neighbourhoods sold for more than 105% of their asking prices, and in just 11 days or faster.
The inventory shortage can be dramatically illustrated by looking at detached and semi-detached properties available for sale in the City of Toronto. At the end of December only 377 new detached properties came to market, not many more than the 340 that sold in the month.
The situation for semi-detached properties is even more severe. At the beginning of this year there were only 154 active listings in the entire City of Toronto, only 38 more properties than the 116 semi-detached properties that sold in December. The situation for condominium apartments parallels the shortage of semi-detached properties.
These property shortages would normally result in substantial price appreciation. Normal however is no longer 2.5% five-year fixed mortgage interest rates. Bank posted rates are currently 5.59%, and even if that isn’t the rate borrowers will have to pay, the buyers will, because of stress testing, be required to qualify at that rate. The disappearance of cheap and easy money is now driving the Toronto and area market place.
Looking forward, certainly in the short term, there is nothing on the horizon that will see any dramatic changes to the current Toronto real estate market. Sales volumes will be lower than historic norms, and average prices will continue to moderate.
Currently unemployment numbers are at a 40-year low. Subject to stability in the mortgage markets, wages should start to rise beyond inflationary levels which with time will ease our prevailing affordability problems, which in turn should see moderate increases in sales volumes and to some extent in average sale prices. The process will be slow with both buyers and sellers at times adjusting painfully to the new resale landscape.
Victoria Boscariolis a real estate agent in Toronto Canada with Chestnut Park Real Estate Limited Brokerage. With over 20 years experience, Victoria has been helping people successfully buy and sell condos and houses in Yorkville and downtown Toronto. As a Certified International Property Specialist (CIPS) she has worked with Buyers from around the world moving to Toronto from China, Russia, Brazil, India, South Africa, United Arab Emirates, Jordan, Cyprus, Italy, Germany, The United Kingdom, Australia and the United States. By building an international marketing strategy for every property she puts up for sale, Victoria's listings of Toronto homes and luxury condos get global exposure that attract qualified buyers from around the world.
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purchase, sale and lease of real estate as part of a cooperative selling system. Canadian Real Estate Association Last Updated: 7/18/2019 01:05:40 AM