Toronto real estate is still cooling off from the great panic buying of early 2017, and the condo market is no exception. Numbers from the Toronto Real Estate Board (TREB) show that condo price growth continued to taper in November. Generally speaking however, prices climbed, sales dropped, and inventory surged higher.
Toronto Condo Prices Climb, But Growth Is Still Tapering
The price of a condo is higher on both a monthly, and annual basis. The benchmark price across TREB, a.k.a., the price of a typical condo, is now $464,000. That’s a 0.04% increase from the month before, and a 21.62% increase compared to the same month last year. In the City of Toronto, the benchmark price reached $486,200. That’s a 0.2% climb from the month before, and 23.53% higher than the same month last year. Benchmark prices showed mostly positive growth, but there are a few things to note.
Source: TREB, Better Dwelling.
The growth trend of TREB’s benchmark condo prices are tapering very rapidly. The monthly increase of 0.43% is more than 15% lower than the 10 year median growth rate of 0.51%. At 21.56%, the 12 month trend is substantially higher than the 10 year median growth rate of 4.94%. However, it’s showing a rapid decline from the peak of 30.60% seen just a few months ago. Tapering is expected after such a large peak. Prices are about to stabilize or head negative to balance “excess” growth.
Source: TREB, Better Dwelling.
Condo Sales Climb On A Monthly Basis, Which Is A Little Weird
Toronto condo sales are down from last year, but made an unusual monthly move. TREB reported 2,210 sales in November, a 9.13% increase from the month before. This represents an 8.26% decline when compared to the same time last year. Typically sales decline from October to November, not rise. This lends a little extra credibility to those agents claiming that people are trying to “squeeze in” before the new mortgage rules go live in just a few days.
Source: TREB, Better Dwelling.
Inventory Is Still Huge Compared To Last Year’s Lows
New listings were up compared to last year… by a lot. TREB reported 3,243 new listings in November, a 3.45% decline from the month before. Compared to the same month last year, that number was up 18.35%. Typically new listings for condos in Toronto decline from from October to November, so that’s normal.
The number of active listings, which are the total condo listings available, made an even bigger climb. TREB reported 3,618 new listings, a 6.5% decline from the month before. This is a whopping 27.57% increase compared to the same time last year. Typically active listings see a monthly decline from October to November as well.
In case you didn’t already figure this one out, the market mechanics here are a little off on this month. Condo prices climbed, despite more inventory and less sales. Normally this would soften prices, like we saw in the summer, but we got a climb. New mortgage rules next week would see buyers lose over 20% of their maximum borrowing room. If these time-constrained buyers are the reason for the uptick in prices, there’s not a lot of reason to believe that the trend will continue after January.
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Could you please include the median price in future articles? It’s now $450,000 for a condo in Toronto, which is DOWN 5%.
Until CREA becomes more transparent about the process in which they create benchmark prices, I always recommend that buyers look at the change in median price. It’s a much more standard, and accepted method for analyzing broad real estate markets. Let me know if you need access to that data.
Great point about B-20 buyers. The rush is very real, but unfortunate. Rather than using the tool the government is using to ensure you can continue to pay your bills, people are trying to “beat the system.” Spending more than you can afford isn’t beating the system, it’s ensuring that you’re going to be the weakest link.
Sold my condo in February, couldn’t be happier. Not prepared to jump into the market until it shows some sort of stabilization, especially in the detached market. Right now is a wise time to sell, not a wise time to buy. Few good buying decisions are made when rushed.
Are you sitting on the money from the sale of your condo or investing it elsewhere?
I know a couple who 10 years ago sold their huge home in Parkdale for mid-$700Ks and thought they would time the market for a purchase, thinking the market had neared its peak. Every so often they contact me to feel out the market and are sticker shocked at the prices and decided to hold off. Today, they are still sitting on the sidelines waiting for an opportunity to get back into the market. Their old home is worth 2-2.5x what they sold for in 2007.
My point is that you can’t time the market. You only get lucky with timing. I recall early 2009 when we were all expecting a big correction. There was a correction that lasted about 4-5 months, but it came and went quickly and those on the sidelines missed out on an opportunity to buy 8-10% cheaper than the previous peak. I see the current market in a similar state and by the time people read about it in the papers, that window of opportunity will have closed.
If you were thinking of transitioning from condo to house, it is actually a great time to do that, since the gap between condo and house prices is the lowest we have seen in several years. I expect to see a wave of condo sellers moving into the freehold market in Toronto because the two markets are behaving in a way that is favourable for this type of move: sell high and buy lower for a more desirable asset class.
Eventually, Toronto will be a city of renters and condo dwellers and freehold homes will be accessible only to the upper class. That’s where we are headed in the long term.
Some speculators have moved on to Montreal.
The high inventory availability of homes, along with stable prices, is interesting.
Methinks that realtors are not doing their jobs. They are not taking bids to the seller that are lower than asking. Are they convincing buyers that it is no use to underbid? It would seem to me that this is the BEST tie for realtors for the buyer to strongly recommend a bid that undercuts the asking price.
Wait – te realtor would end up with less commission. What am I THINKING?
Less commission? It would be only a few hundred dollars or a couple of thousand, I don’t think it’s because of the commission.
Condo prices have sustained their high priced due to lack of supply in the downtown. We saw an unusually low supply of condos combined with a huge demand to start off the year which led to the insane price increases that we experienced over the months from Jan to Feb, Mar & Apr. All things being historically equal, sales will come down in the New Year with B-20 coming into play. I know that TD has offered to hold their pre-approvals based on the old rules for a max of 4 months of so this may help the demand side a bit for the start of the New Year however, overall the sales volume will fall. The median price of condos in the downtown core C01 according to the TREB Market Watch pg 14 for the month of Nov 2017 is $542,500. This means that HALF the MLS sales of all the condos in the downtown core was under this number. After B-20 the max-leveraged buyers will only be able to afford to buy under $434,000. Out of the 381 condos currently active for sale in the C01 district only 21 are under this price point. So their only option is to wait for prices to come down or miraculously come up with another $108,500. Anyone that thinks the B-20 will not have an impact on prices should go back and take Econ 101. The demand curve is about to shift left folks and experts are predicting the prices are going to hold steady or go up next year? Don’t get me started on what’s going to happen once they start reporting the year over year numbers starting from Feb onward. The media will absolutely love reporting a 15%+ drop year over year. According to TREB market watch the GTA overall average price in Nov 2017 is $761,757 and in Feb 2017 it was $875,983! Do the math. I wonder what the average Joe investor led by his blind Realtor is going to do when he sees these numbers? I would conservatively guess that over 50% of all the condos in the downtown core are owned by investors. The smart investors will ride out this wave because luckily the rental market is still strong and if you purchased pre 2017 you may still carry with 25% down. However, if history is any indication most “investors” are stupid.
In late 1989, investors began dumping their rental properties; I see them dumping tenanted properties right now.
Your all a bunch of rubes since when did all your crystal balls start functioning by a house to live in it man and when it’s time to go , you will have enjoyed your stay ,life is short enjoy it while your here
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