Toronto Real Estate, Where Are We Now?
As we head into the fall market, many Greater Toronto Area housing segments are hitting new price highs. Something that hasn’t been seen for a couple of years. Although the average sale price across the GTA still remains almost $100,000 below the high reached in April 2017, TREB’s GTA Home Price Index (HPI) seems destined for new heights, potentially before the year is out. The HPI is a more sophisticated measurement of home prices than average sales and is less likely to see large variances caused by outlying sales. This index tends to trail real time sales by 2 months as the data used is based on the closing date instead of the sold date used for average sales.
Want to know if your home is reaching all time price highs? Check out the chart below. Be aware that many neighbourhoods within the areas outlined below may be seeing greater variances. For instance, Detached homes in Toronto neighbourhoods like Leslieville and Roncesvalles are actually up 5-12% since May 2017 while neighbourhoods such as Bridle Path and St. Andrews remain down.
| HPI Index Comparison | ||||||
| May 2017 | September 2019 | |||||
| Treb | 269 | 821,000 | 266 | 805,500 | -1.89% | Down |
| Detached | 281 | 1,050,000 | 256 | 947,000 | -9.81% | Down |
| Condo | 231 | 465,000 | 274 | 547,000 | 17.63% | Up |
| Toronto | 256 | 830,000 | 275 | 890,000 | 7.23% | Up |
| Detached | 280 | 1,229,000 | 259 | 1,136,000 | -7.57% | Down |
| Condo | 232 | 478,000 | 281 | 578,000 | 20.92% | Up |
| Halton | 280 | 958,000 | 279 | 900,000 | -6.05% | Down |
| Peel | 257 | 729,000 | 261 | 740,000 | 1.51% | Up |
| Detached | 261 | 918,000 | 253 | 894,000 | -2.61% | Down |
| Condo | 228 | 394,000 | 274 | 469,000 | 19.04% | Up |
| York | 308 | 1,052,000 | 254 | 858,000 | -18.44% | Down |
| Detached | 319 | 1,244,000 | 257 | 977,000 | -21.46% | Down |
| Condo | 232 | 511,000 | 233 | 511,000 | 0.00% | Even |
| Durham | 263 | 615,000 | 243 | 567,000 | -7.80% | Down |
| Detached | 259 | 673,000 | 238 | 617,000 | -8.32% | Down |
| Condo | 237 | 425,000 | 243 | 413,000 | -2.82% | Down |
| Dufferin | 259 | 594,000 | 263 | 604,000 | 1.68% | Up |
| Simcoe | 262 | 561,000 | 240 | 526,000 | -6.24% | Down |
Sales
Sales are bouncing back from 2018 lows. Annual sales peaked in 2016 and began their decent in Q2 of 2017. The past 3 months of sales have shown increases over both 2018 and 2017, but still well off the feverish levels of 2016. What is noteworthy is that Buyers are rushing back to the Detached home segment. The number of detached sales in the GTA have been seeing 20-30% year/year increases in recent months.
Prices
Trebs HPI index continues to tick closer to the highs reached in 2017. At 265.5 it’s just 3.5 points off the high reached in May of 2017. The average sale price of $843,000 for September 2019 was the highest September on record, but remained well below the all the time high of $918,000 reached in April 2017.
Inventory
Active Listings in September are down 15% from last year. With demand outstripping the number of new listings, inventory has been tightening in the GTA as we continue into the fall market.
Rental Market
The number of apartments listed to lease in Q3 of 2019 via TREB’s MLS system jumped 30% year/year. This is the 4th consecutive Quarter of double digit supply increases. Fortunately for landlords, demand continues to be strong as the number of leased units in the same quarter jumped 17% from last year.
What’s Coming Next?
Lower interest rates are probably the biggest factor in the GTAs market resurgence over the past 3 months. Buyers have been able to find 5 year fixed rate mortgages in the 2.5% range recently. A big change from the 3.5% interest rate being on offer a year ago. That 1% difference makes financing your purchase almost 30% cheaper this year than it was last year. On an average $850,000 purchase, that lowers your monthly costs by about $350. It decreases the amount of interest you will pay over that 5 year period by $32,000 (assuming 20% downpayment). You can see why all things remaining the same some Buyer’s might decide to increase their budgets from this time last year.
In addition to more favourable financing conditions, home buyers are being wooed by would-be prime ministers. All parties are making election promises that will further stimulate the country’s housing sector. Policies designed to continue to try and stimulate demand in the overly competitive first time buyer price points. This is in addition to the new First Time Home Buyer program newly implemented in September 2019.
The market has shown a resurgence in recent months. A surge that is no longer driven by Buyers flocking to more affordable condo options. Lower interest rates seem to have given home buyers more confidence and have made it more affordable. This increase in demand is putting upward pressure on prices, we may see some balance maintained if Sellers see increased prices as motivation to list their Toronto home. The Stress Test and higher inventory levels are preventing the same level of enthusiams we saw to start 2017. However, if inventory fails to increase and we don’t see a drop in demand, new price highs seem inevitable.
