The summer months are typically slower for property sales in the City of Toronto and July 2017 was no exception. Actually less sales volume was achieved than expected with only 5,921 properties reported sold for the month. This is a 34% decline from July 2016 when 9929 properties were reported sold.
The Toronto Real Estate Board sales statistics span the Greater Toronto Area, a massive amount of land that includes Halton, Peel, York and Durham Regions as well as Dufferin & Simcoe Counties. In this fragmented real estate market of diverse areas and neighbourhoods its important to drill down to the property sales statistics for the City of Toronto rather than include all of the GTA as the more outlying areas of the 905 are seeing a greater slowdown with lower sale prices than that experienced in the 416.
For the City of Toronto, the average sold price for a property was $759,441 for the month of July. This is 10% higher than last year when the average sold price was $690,103 in July 2016. However, this is down dramatically from prices achieved at the beginning of the year. For example, $943,947 was the average sold price for a property in the City of Toronto in April. Since then the average sale price has decreased by 20% or $185,000.
This unprecedented rapid decline in average sale prices has put tremendous pressure on lenders trying to determine current fair market value. As a result, buyers who purchased closer to April with closing dates in late June and July are having trouble funding their purchases as lenders reduce the amount they are prepared to loan based on the declining value of properties. Although this is a temporary and transitional period it is an unpleasant place to be if you are a seller who has bought and is having difficulty selling in the face of rapid declining average prices or a buyer whose financial institution is reassessing the amount of financing it is prepared to advance.
Buyers, who have hit the pause button, waiting to see how far prices will drop before they re-engage do not necessarily have more choice as supply in the City of Toronto seems to be at lower levels than last year. This July, 4499 new listings came to market, which is almost 8% less than last July when 4877 new properties came to market.
At the end of July there were 5700 properties available to buyers in the City of Toronto, 15 % more than the 4930 properties available in July last year. On a 12-month moving average at the end of July those 5700 active listings still represented only 1.2 months of inventory. A balanced market is represented by 2.5 to 3 months of inventory. If the market picks up in the fall, as is expected, supply could once again become a problem.
Buyers are taking slightly longer to make decisions about buying properties. In July, all properties sold (on average) in 20 days. Last year it only took 19 days for all properties to sell. Detached properties appear to be taking longer to sell than semi-detached and condominium apartments. In July, it took 22 days for detached homes to sell. Semi- detached properties sold in only 19 days and condominium apartments sold in 20 days and only 19 days in Toronto’s central districts were most of the condominium apartment supply is located. The only explanation for this difference is price-point. Less expensive properties continue to sell quickly.
This is clearly the case with condominium apartments, where a supply problem is developing. In July, there were 2,710 condominium apartments for sale in the City of Toronto. Last year there were 3,307 apartments. We enter August with 29 percent fewer available condominium apartments for buyers to buy. There will be tremendous pressure on condominium apartment prices, as more buyers begin competing for an ever-shrinking inventory in the fall. It’s not surprising therefore that in Toronto all condominium apartments sold for 100 percent (on average) of their asking price in July.
The change in the residential resale market, and the speed with which it has changed, is very confusing. There has been no change in the economic fundamentals between mid-April and the end of July, yet the market is substantially down in average price and in volume. The provincial foreign buyer tax in itself cannot be responsible for this tectonic shift. By the government’s own admission, foreign buyers represented only about 5 percent of all sales. This is a classic example of the market changing because of psychology. But at the end of the day, the demand that was in the market in April is still there today, and at some point in time, perhaps when buyers perceive that the bottom has been reached, those buyers will be back in the market, perhaps not as exuberantly as before, but they will be there.
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.