Toronto Market Update (The Inside Scoop) - The Storey Team : Toronto Real Estate

The Storey Team : Toronto Real Estate

Toronto Market Update (The Inside Scoop)

18 September 2017
Tom Storey

 

Well, it’s already September, and the summer that never really showed up is almost gone. We're 8 months through 2017 and our real estate market has proven to be two VERY different 4-month segments. 

Let's break it down. 

January - April 20th (The first four months-ish)

  • Average prices grew from $770,000 (January) all the way up to our peak of $920,000 (April)
  • We saw a 4 months of price growth that we have never seen before ($150,000)
  • At the peak of our market in April - we saw year over year price growth in all four property types. 
  • (Detached up 24.3% -   Semi-Det up 24.2% -   Townhouse up 30.1% - Condos up 32.1%)
  • We were seeing a lot of “Are you kidding me!” prices on a daily basis. 
  • Our market was moving so quickly that it came to the attention of the Ontario government, and they put their Fair Housing Plan into action on April 20th. 

April 20th

  • The Ontario Fair Housing Act and it's 16 point plan was introduced 
  • Notable changes: Foreign buyer tax, rent control, vacancy tax (proposed)
  • We saw this plan have an immediate impact on our real estate market. Sales were down, listings were up, and prices came down. 

The Last Four Months (May to August)

  • The detached housing market took the biggest hit. Seeing sales down, and listings flood the market over a short period of time. 
  • Condos and townhouses remained hot - with year over year price growth up at almost 21.4% for condos and 8.9% for townhouses based on the August market stats. 
  • We saw months of inventory grow. Months of inventory  means “if people stopped listing properties today, it would take this long for the market to sell out” 
  • Our low this year was in March at 0.67 (which means the market would sell out in 3 weeks)
  • Our high was July when we hit 3.16 months of inventory (market would sell out in 3 months)

Conditions like house inspections and financing started creeping back into offers, and accepting offers anytime became the norm.

Okay, Tom but what does this actually mean?

We have seen the peaks and valleys in a short period of time, but I do believe the government intervention helped our overall market. The market was trending at an unsustainable rate, and if we keep moving at that rate we may have seen a crash landing. The 16 point plan gave our market a “soft landing” - and everyone is going to be okay :) 

A few things to consider for the future. 

  • Rental prices are sky rocketing (some properties getting 10-20 offers) so it's a great time to be a landlord. 
  • Rent control was a short term solution, that causes a long term problem. Since starting rents cannot be controlled, rent will continue to go up. 
  • A vacancy tax will eventually come (as Toronto likes to copy what Vancouver does)
  • As of today, we have 2.58   months of inventory. Anything under 4 months is considered a seller's market. 
  • Our market went from insanity back to normal, and I think it’s just taking people a bit longer to adjust.
  • The good properties (that show well, and are priced correctly) are still selling quickly for large amounts of money. It’s the “not so great” or "overpriced" properties that are not selling. Again, a sign of a healthy market.  
  • Right now may be a good time to Move Up in the market. Example. If your house is worth $800K now but was worth $900K in April, you might think you lost 100K right? Well not exactly…. If your looking to move up to a bigger house.... well that house that would have cost you 1.3M in April is now worth 1.1M. So you're actually up 100K... it’s all how you look at the numbers. 

A few interesting facts about the Toronto market

  • From 2000-2017, properties in Toronto have appreciated an average of 7% a year.
  • Our downtown core is currently growing 4x faster then the average city. 
  • The average price of a 1 bedroom rental in Toronto is $2,000 a month. 
  • The average sales price in August was up 3% year over year.

How has Toronto's market increased over the past 30 + years? 6.57% / year