Toronto

Toronto Condo Inventory Rises Over 44%

Toronto condos might be the best performing segment of the city’s real estate, but a decline in sales combined with a rise of inventory might have started dragging price growth.

Toronto Condo Inventory Rises Over 44%

Toronto’s condo market continues to outperform other segments of housing. Toronto Real Estate Board (TREB) numbers show that prices made a small climb in December. Despite the price growth, swelling inventory and a decline in sales are going to make it hard for prices to climb in the near term.

Benchmark Price Rises 0.90% In Toronto

The benchmark price of a condo continued to climb across Greater Toronto. The price across all TREB regions reached $468,200 in December, a 0.90% increase from the month before. This represents a 21.83% increase, when compared to the same month last year. In the City of Toronto, it climbed to $490,500 in December, a 0.88% increase compared to the month before. That represents a 23.34% increase compared to the same month last year. Yes, that’s a $4,200 increase in a month ($4,300 in the city). Condos made more money in December, than most families that live in them.

Source: CREA, Better Dwelling.

Toronto Median Condo Price Declined By Over 2.5%

Since there’s growing skepticism of benchmark prices, with some realtors arguing they’re delayed, we’ve decided to add median sale prices going forward. Condos across TREB had a median sale price of $446,250 in December, a 0.83% decline compared to the month before. This represents a 16.29% increase compared to the year before.

Source: CREA, Better Dwelling.

In the City of Toronto, the median sale price was $472,500 in December, a 2.57% decline from the month before. This represents a 14.06% increase, when compared to the same month last year. For those struggling to remember what a median is, it’s the number in the middle of all sales.

The reason for the climb in the benchmark, but the decline in median prices has to do with distribution. The majority of condos are still selling in the range of $300,000 to $499,999. In December 2016, 55% of condos sold in this range, jumping to 58% this December. The big change was for condos prices below this mark. In December 2016, 20% of all condos sold for less than $300,000. In 2017, that number plummeted to 6.14%.

Source: CREA, Better Dwelling.

Basically, the most affordable condos are becoming scarce in the market. This brings an increase to the floor of prices. The benchmark pops higher, while not necessarily bringing an increase to the price of a condo you would probably consider buying.

Toronto Condo Sales Decline Over 9%

Toronto condo sales are on the slide, following the rest of the market. All TREB regions combined logged 1,562 condo sales in December, a 9.76% decline compared to the month before. The City of Toronto saw 1,125 of those condo sales, a 9.12% decline compared to the same month the year before. This is interesting, considering agents had been claiming that there was a “rush” to buy before the mortgage rule changes this year. This means the sales could actually be artificially high, which isn’t great news.

Source: TREB, Better Dwelling.

Toronto Condo Inventory Rises Over 44%

As always, sales don’t matter unless you contrast to listings – which are climbing. TREB saw 1,579 new condo listings in December, a 13% increase compared to last year. The City of Toronto saw 1,085 of those new listings, an 11.74% increase compared to the same month last year.

The rise in new listings pushed total active inventory significantly higher than last year. TREB reported 2,627 active condo listings for December, a 44.18% increase compared to the same time last year. The City of Toronto contained 1,673 of those listings, a 31.01% increase compared to the same month last year. Two points worth remembering here, the first being last year had record low inventory. The second point is, does it matter? Sales are declining and listings are rising.

Declining sales, and an increase in inventory will make it harder for condo prices to grow in the near term. However, a rising floor on prices, means you’re out of luck if you’re looking for an “affordable” condo in Toronto.

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18 Comments

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  • Reply
    Andy 7 months ago

    Starting to feel like 1990 again. Except theTREB is using their opaque “sampling” to screw with people.

    Fact of the matter is condos that were selling above ask, are now selling for -5% lower than ask. Long term, this will shake out, but this isn’t a market that’s going to keep pushing higher. That’s a good thing, because asset values inflating this quickly become very dangerous. Better to correct now, then to keep going and fall from even higher.

  • Reply
    Trader Jim 7 months ago

    The only thing keeping prices up are delusion. How long that delusion lasts is anyone’s guess, but remember that countries that are house rich are usually economically poor. The further this goes, the worse it is for the economy.

  • Reply
    TO Millennial 7 months ago

    Toronto is a world class city, and it’ll only continue to attract more people. This condo market is just getting started. Agents are estimating that condos in the city will cost $3 million in just a few years apparently.

    • Reply
      bluetheimpala 7 months ago

      Thanks for your insight…as buzzlight year would pontificate: to infinity and beyond! My cat is estimating the price of gerbals is going stratospheric in 2018 so I’m getting into a mix of pure play and futures just in case I need to hedge. Can you advise on other ways I can diversify my gerbal investment to maximize upside and limit the downside? Are hamsters inversely correlated to the price of gerbals or is that just a myth pumped by the big banks?

      • Reply
        John 7 months ago

        Yes. Buy a male and female now but don’t mate them. Wait for an indicator the price is going to skyrocket. Then mate, rise, repeat.

        You’ll save on maintenance while mitigating risk.

        • Reply
          bluetheimpala 7 months ago

          Nice, and I’ll hedge the short-term with guinea pigs and then unwind once Gerbal is at max ROI…thanks mate

    • Reply
      Joe 7 months ago

      I guess by your name “TO Millennial”, you never experienced the wrath of an asset bubble bursting? “This time it is different” has never been different in the end. Toronto real estate, esp. condos have all the hallmarks of an asset bubble bursting. The worst part about an asset bubble bursting is seeing a young , new generation being indoctrinated into it. From tulips, south sea, Mississippi, dot com, us housing, and 500+ large bubbles over last 500 years, a new generation will learn the hard way.

      Your agents are telling you $3 million?? Thanks for the laugh.

    • Reply
      ASTERIX 7 months ago

      I think this kid is kidding!

      Please tell me you are not serious.

      3M$ for a condo. Hilariously uneducated and morally bankrupt agent. You should buy 10 condos now. Will be worth 30 million soon…

    • Reply
      Alistair McLaughlin 7 months ago

      Toronto condos and Bitcoin. The only investments a young person needs. Don’t listen to the doomers and naysayers. Us oldsters are just jealous that your entire generation will retire wealthy by age 40. You always were so much smarter than us. 🙂

    • Reply
      YYZ 7 months ago

      I would laugh every time someone says Toronto is superior because is a world class city. Wealthy chiinese buy properties in Toronto because they are trying to park their money. That’s all. It has nothing to do with the so called awesome economy. “High paying” jobs. Give me a break. Low 6 figure CDN with 30+% income tax is considered decent pay about 25 years ago. Wealthy Chinese are not here for that. And not for the freaking crazy cold in winter and the extrame unbearable hot summer. Hot money will and is leaving Toronto RE when it is no longer going up. Guys need to wake up an smell the coffee.

  • Reply
    Chris 7 months ago

    Wow, 500k for a crap condo. You know I could buy 2 condos for that in lets say Ottawa and Tampa and never experience a terrible winter or Toronto traffic again.

  • Reply
    Woozy 7 months ago

    The problem with your analysis on the condo inventory is you haven’t put it in context. There were 2,627 active listings in the GTA (all areas) at the end of Dec. 2017, which is 44% higher than last year. So what you state here is correct. However, what you haven’t indicated is that over the past 10 years (120 months) this inventory is the fifth lowest recorded level in 10 years. The only months where inventory levels were lower all occurred over the past 13 months. See the data below. The other issue is the year over year increase of 44% is compared to Dec 2016 which was the second lowest level of inventory in 10 years. So, if we ‘normalize’ this and compare it to the average active listings for December in the past 10 years (average Dec inventory between 2008-2017 is 3,850 units vs the current 2,627), they look low. Thus, inventory is actually 32% below historical norms! This partly explains why condo prices continue to rise despite the “higher” inventory levels. Anyway, just my 2 cents.

    Feb ’17 1,791
    Dec ’16 1,822**
    Mar ’17 1,922
    Jan ’17 1,946
    Dec ’17 2,627**
    Apr ’17 2,630
    Nov ’16 2,836
    Historical average for December (’08-’17): 3,850

    • Reply
      bluetheimpala 7 months ago

      Agree. Land banking is a real thing and is driving up real estate prices all over BC.

    • Reply
      Tommy 7 months ago

      Yes context is everything so comparisons between the entire Q1 of 2018 with Q1 of 2017 will look dramatic but not reflect that the market has simply returned to long term trends.

  • Reply
    Common Man 7 months ago

    I have a friend who got PR status 1.5 years back and left Canada a 1 year back stating or realizing country do not have enough employment opportunities as projected in her profession. She went back home and I got an update from her yesterday that she is visiting Toronto for 15 days with the sole purpose of (investing) buying a property which she might use if one day she decides to return. Her budget 600K looking for a condo. Her father is paying for that basically her father is trying to hide his black money.
    This is the problem with real estate in Canada, It is seen as an investment or tax haven for black money. Rich immigrants not only screw citizens but hardworking resident immigrants and future immigrants too.
    And I am sure if they make money on their purchase they will but more and more and Gov. data will show it is sold to a PR status holder. Menas Gov. strategy is working to improve their books but they are screwing the future of Canada as a country. This is why the real estate price will never come down. Because super-rich of the world does not care about the cost of the condo they care about how much they are saving or avoiding by investing in Canada real estate tax haven.

    • Reply
      Alistair McLaughlin 7 months ago

      Probably more common than we think it is. But… foreign money is not a guarantee of never-ending escalating prices. If anything, foreign money is skittish. It will pile in when there is money to be made. But it will head for the exits just as quickly once the market turns.

      Foreigners buy Canadian real estate because they expect it to increase in value. There is simply no scenario in which foreigners will continue to pile into an asset class when they expect that asset to decline in price. That’s not what investors do. Nor is it human nature.

      If anything, heavy foreign investment in-flows make a real estate crash more likely, not less likely.

  • Reply
    | Point2 Homes News 7 months ago

    […] According to the Toronto Real Estate Board, December brought a slight increase in the price of Toronto condos. However, due to a drop in sales activity and a growth in inventory, a slowdown is expected in the near term, reports Better Dwelling. […]

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