Toronto

Toronto Condo Buyers Have No Idea What Condos Are Worth

The Toronto condo market is making erratic swings, with some neighborhoods posting over $30k gains, and others posting over $30k in losses.

Toronto Condo Buyers Have No Idea What Condos Are Worth

The Toronto condo market is making wild, erratic price swings as buyers try to figure out where the market is heading. July numbers from the Toronto Real Estate Board (TREB) show that some neighbourhoods are seeing prices rise by 10s of thousands of dollars. At the same time, other neighbourhoods are seeing prices decline by 10s of thousands of dollars. All this while sales are plummeting.

Condo Price Growth Deceleration

The price of a condo is still very much higher than last year, but price growth is quickly decelerating. The benchmark price across TREB, which is the price of a typical condo, is now $463,000, a 0.94% decline from the month before. In the 416 proper, the benchmark is now $481,300, a decline of 0.8% from last month. Both prices are still at huge annual gains, with the TREB benchmark condo still up 27.87%, and the 416 benchmark up 29.36% from the same month last year. Worth noting that benchmark price gains are decelerating very quickly however. Just last month the annual gains were at 30.6% (TREB) and 32.16% (416). Still huge profits either way, just…less now.

Breaking down the benchmark by region, not all prices are moving in the same direction. The largest gains were made in the Malvern-Rouge Valley Area of Toronto (TREB E11), where prices are now $30,400 higher than last month. The benchmark price in the E11 region is now $435,800, a 64% increase from the same month last year. The largest price drop is currently in the Beaches-Woodbine Corridor (TREB E02), where prices declined $32,200 from last month. The benchmark price in E02 is now $681,900, up 9.24% from last year. This market very much depends where you are, with more affluent neighbourhoods not being where the biggest profits are being made.

Source: TREB.

Condo Sales Decline Over 28%

Sales of condos across the GTA took a nosedive, especially in the suburbs. TREB reported 1,840 sales, a decline of 30.7% from the same month last year. Breaking that down, the 416 saw 1,345 of those sales, a 28.3% decline from the same time last year. In the 905, there was 495 sales, a 35.5% decline when compared to the same month last year. The 905 saw sales drop a little faster than the 416, but both saw substantial declines either way.

Source: TREB.

Condo Listings Decline 9%

The number of listings in the GTA are also declining. TREB reported 3,421 new listings, a decline of 19.4% from the month before. This also represents a 9% decline from the same time last year. Listings dropped, but not as fast as sales – so this technically should have relieved some pricing pressure. The sales to new listing ratio for condos has fallen to the lowest since January 2016, about 24% lower than it was the same time last year.

A little air has been let out of the condo market, but buyers of lower end units appear to be optimistic. Although condo buyers that bought with a 5% down, high-ratio mortgages last month would be underwater, or very near to underwater, in 3 Toronto regions before expenses today. After expenses, you’re looking at closer to 2 in 5 neighbourhoods. On the flip side, 3 out of 5 neighbourhoods saw a high-ratio benchmark buyer above water. So there’s that. Bottom line, it’s pretty risky to buy and flip in less than 12 months like the 7% of seller that did just a few months ago. Although who knows what people will be thinking next month.

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10 Comments

  • Reply
    Tommy 3 months ago

    Sales and prices always decline between June and August. This happens every year. It’s a normal seasonal pattern in Toronto real estate.

    • Reply
      Trevor 3 months ago

      Sales increased from July to August last year, so no, they don’t ‘always’.

      And nothing is normal about selling 1300 units in July 2017 when 2100 sold in 2016 and 1900 in 2015.

      You have to go all the way back to 2008 to see a similar number. And that was under exceptional historic circumstances.

      • Reply
        Al Daimee 3 months ago

        It’s really not a fair comparison to draw conclusions from the slower months of the summer. Looking at more than just 2016 history, you will see that last year was an exceptional year in relation to 2015 and 2015, both also considered hot markets:

        2017 YTD to end of July GTA sales activity: 60,620 (22,487 in City of Toronto)
        2016 YTD to end of July GTA sales activity: 70,098 (25,010 in City of Toronto)
        2015 YTD to end of July GTA sales activity: 64,262 (23,181 in City of Toronto)
        2014 YTD to end of July GTA sales activity: 57,910 (21,325 in City of Toronto)

        Let’s contrast this to the worst year we have seen in the last decade where we had the first 3-4 months of a soft market that rebounded quickly into the summer months:

        2009 YTD to end of July GTA sales activity: 16,915

        In this timeframe, prices dropped then rebounded and then proceeded to see gains of 6% over July 2008 prices.

        So our 2017 data sits nearly halfway between the activity of 2015 and 2014. Those are pretty good numbers given that we have recently had the most government intervention seen yet during this real estate boom.

        August is typically the slowest month for real estate, so I am sure that media outlets will rain down upon us more doom and gloom, but the ones that see that there are buying opportunities right now are quietly snatching up some pretty good deals… deals that won’t be had for much longer as buyers start to catch on and ratchet up buying activity in the fall.

        The current rental market has seen a huge increase in prices, thanks to the government’s rent control act that was supposed to have “unintended consequences”. This now brings about the rent vs. buy question again, as the price differential can make a buying scenario more attractive to those with savings and a strong household income. This in turn will push more sales activity and prices due to competition and buyers’ desire for quality properties.

        • Reply
          Trevor 3 months ago

          Your YTD numbers are misleading because Spring 2017 was historically strong. Chucking things into aggregate makes it easy to hide collapsing sales, but collapsing they are.

          Sales are down 40% per month for three straight months compared to last year.

          The rental market is booming because it’s that time of year (September) and people talk – they know that the market is very quiet. Agents know it too.

          Why on earth would buying activity ‘ratchet up’ in the face of house prices down 200k and buyers running for the hills?

          Plus the coming stress test
          Plus rising interest rates
          Plus government intervention
          Plus a nervous market of overextended owners might capitulate at any time?

      • Reply
        Tommy 3 months ago

        There was no government intervention in 2016. We’re seeing the market react to uncertainty created by government policy. In fact, the market is showing tremendous resilience in spite of the intervention. While sakes are down, prices are still up, and we may see a return to a hot but more balanced market this spring.

        Sales and prices declined from spring to summer in 2016 just like it does every year.

  • Reply
    Al Daimee 3 months ago

    EDIT to my post:

    2009 YTD to end of July GTA sales activity should read as 50,632

  • Reply
    brandi kellins 3 months ago

    If you value your money then dont think of buying now. No matter what just rent it. You will recover that money in future.Now most of second home owners are on fixed for 5 years. When end of tenure comes they just sell with even small profit.

  • Reply
    Jungle 3 months ago

    How many units are being built right now? So many cranes in the air still. How will this affect inventory as sales decrease?

    Right now there’s almost 3 months of condos for sale in Toronto, according to ZOLO. So buyers have lots of choice still. I don’t see how prices will continue to go up, especially after last years run up made them very expensive now.

  • Reply
    This week's news: Vacant home tax, housing affordability, condo worth 3 months ago

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  • Reply
    Marshe 3 months ago

    Anyone remembers a wise Finance minister Jim Flaherty? Talk about QE and Morgage regulation!!!! Was he gone quickly after a cancer?? Then banking sector started raking in huge margins!!!

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