Toronto Market Report June-July 2017

Toronto Real Estate Market Report May-June 2017

Sales Commentary

May Real Estate Sales

The big or new story with this market is the shrinking sales numbers – lower sales have been recorded every month since March. Starting in the first two weeks of April, sales on TREB averaged 435 per day. The last half of April the daily number was 345. In May we averaged 329 sales per day and with the mid-month report for June, we are at 214 sales per day. Historically, May and June are the biggest sales months of the year. For 2017, our biggest month has been March.

So why have sales dropped? It began with prices skyrocketing by 30% at the start of the year. Buyers couldn’t wait to throw money at average properties because there was little to choose from. Everyone knew this price explosion would not last long. It was just a matter of time, and that time came at the end of March and the first week of April. Governments and media kept claiming a major price correction was coming. At the same time, we had no listing inventory. Today listing inventory is normal. In today’s market, sellers are still asking for April prices and buyers want a 20% price reduction. This expectations gap produced significantly lower sales. Which side will cave first? On the Seller side, we see more cancellations with plans to come back next year. (Sellers don’t have a to sell now unless they get their price – mortgage arrears are at an all-time low). Buyers are waiting for a major correction – it will not come and they will be back in the market in a matter of months. The long-term growth fundamentals for Toronto tell us that.

Certain market areas and property types are still selling well. These are prime properties where buyers are looking long term and are comfortable in paying today’s prices. One area of strength has been the downtown condo market. In May sales on TREB were down 20% while downtown condo sales were only 3% lower than for the same month last year. In Humber Bay Shores, condo sales this year in May were the same as last year.

Our advice: For Buyers, use the market pause to spend more time to find and buy the perfect property for you. For Sellers, take a little less to sell now or be prepared to wait until next year.

Toronto Active Listings for May

May 2017 Active Listings for Toronto

This chart plots the monthly Active Listings for the Month o May with 5 previous years for comparison. source: Toronto Real Estate Board

 

Toronto Waterfront: 55 Harbour Square

This month we looked at sales in 55 Harbour Square, one of the first buildings on the Waterfront. This is an older building with 8 ft. ceilings but it is well maintained and has larger units which are appealing to families and baby boomers downsizing. Our primary search was for units that sold in 2017.The first unit we tracked was a one bedroom plus den with parking and locker.  It first sold in 2003 for $205,000 and in March of this year for $529,000. At 896 sq.ft. that is only $590/sq.ft. which is a steal. However, it has no view from a lower floor. Compare this to a sub Penthouse sale with views. This two-bedroom unit has only one washroom but has a locker and parking. It sold in 2005 for $383,000; in 2008 for $490,000; in 2014 for $750,000 and in 2017 (May) for $915,000. The price jump over the last three years was 7% per year. This unit is 1052 sq.ft. and that transmits to a price of $870/sf. Both units were recently upgraded so the difference is just in the view! We also sold a 2,000 sq.ft. three-bedroom unit in May (again after the market change) for just under a $1,000 per square foot. Again, it has superb lake views. Our point is that prices are not dropping for premium properties.

 

Rental Commentary

Over 1200 condo units were leased downtown in May compared to just over 800 sale units. People continue to want to live downtown. Transportation issues with driving (and the expense) and the failure of public transportation has made walking and biking the preferred and fastest mode of transport! Yes, the multiple offer market has moved to rentals.
Rental prices continue to increase. Remember that ‘rent controls’ announced and effective April 20 (but not yet law) only apply to tenants renewing their lease. New leases can be set at market rates. 
Studio or bachelor condos are now renting at $1575 per month (
up $25 from last month). The basic one bedroom without parking is now renting for $1800 – up $75 from last month. Expect to pay $200 per month just for parking. Add a ‘plus den’ to the one bedroom with parking and you are looking at an average rent of $2225.
The two-bedroom market has also seen price increases. While the basic two-bedroom without parking averages $2500 per month, the two ‘plus den’ and parking is over $3200 per month. Three-bedroom condos averaged over $4,000 per month in May.
Another piece of the ‘Fair Housing Plan’ is to dismantle the OMB which will slow down future development and intensification. Just like the Liberal Green Belt Plan, you can be assured that this will make rent and prices increases of existing condos even more expensive in the future. So If you think condo prices might come down, you can bet that today’s rental prices will only go higher.  

 

Number of Sales by Area for May 2017

This map shows the number of sales and median price for residential homes for May 2017 by municipal breakdown.


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