The residential real estate market in the City Of Toronto continued to show signs of strength for the month of March with an average sold price of $817,642, up 6.7% from January.
In April 2017, the provincial government implemented a Foreign Buyer’s Tax in attempt to cool the overheated housing market. Since then it has been shown that Foreign Buyers are involved in less than 5% of all residential property sales in the Greater Toronto Area.
While it did cause Buyers to press pause to paying runaway record breaking prices for properties in the City Of Toronto, the Foreign Buyer’s Tax has not been a major force in controlling the market.
The economic fundamentals that give this market its resiliency remain the same: modest economic growth, low unemployment, rising salaries and most importantly short supply combined with continued immigration to Toronto.
Ultimately what will control the residential real estate market in the City of Toronto is the cost of housing through the amount of housing supply available, the cost of mortgage money and qualifying for mortgage financing.
The rising average sale price in March was a clear indicator of lack of supply. Demand was demonstrated by how quickly all listed properties sold in March. The average days on market was only 17. That is a pace consistent with the most aggressive seller’s market.
All detached properties in the City of Toronto also sold in only 17 days. All semi-detached properties sold in a shocking 13 days, and in only 11 days in Toronto’s eastern regions.
All condominium apartments in the City of Toronto also sold in only 17 days. As hard as this is to believe, this is a pace not that different from the delirious pace of the first four months of 2017.
When the market moves at the above-noted pace, it is not surprising to see average sale prices rising. In the City of Toronto all properties, including condominium apartments, sold for 101% of their asking prices, coming in at $817,642.
All detached properties sold for 100% of their asking prices, coming in at almost $1.3 Million. Unbelievably semi-detached properties sold for 107% of their asking prices, the average sale price exceeding $1 Million.
Even condominium apartments sold for 101% of their asking prices with an average sale price of $590,000. In Toronto’s central core, the average sale price for condominium apartments was $656,836. Condominium apartment sales are now taking place at approximately $1,000 a square foot.
The ultimate reason for these incredible numbers is the lack of supply. Notwithstanding that the number of active listings in March (4,104) was 40% higher than the 2,809 properties available last year.
The situation involving condominium apartments is reaching crisis proportions. In March 1,573 condominium apartments were reported sold in the City Of Toronto. At the end of March there were only 1,854 condominium apartments available for sale, most of them in Toronto’s central core.
If this rate of absorption continues, there will be almost no product for buyers. This is particularly troubling because condominium apartments have been the only affordable housing type available to buyers.
Detached properties were the only housing type that continues to lag behind the rest of the Toronto market. The number of sales were off, year-over-year, by more than 40%, and average sale prices were off by 17%.
The explanation is self-evident. During last year’s delirious market, mortgage money was historically cheap, and relatively accessible. Since then not only has mortgage money become more expensive – three bank rate hikes in the last year – but new mortgage stress testing for conventional mortgages makes qualifying substantially more difficult.
It should also be noted that during the January through April real estate madness of last year’s average prices reached astronomical levels, levels that simply could not be sustained.
Going forward we are not likely to see much change in Toronto’s residential resale market. The key to change is more supply.
There is no indication either at the provincial or municipal level that measures will be taken that would have a positive impact in this area. For political reasons governments may attempt further engineering, but any such actions will have a limited impact on the market, but are likely to have broader, negative economic impact.
Without dramatic change to Toronto’s available supply, Toronto will become one of many other cities in the world that because of their political and financial stability where real estate ownership will not be available to everyone. That begs another question: what about the rental supply?
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.