Toronto condo prices are still sky high, but are seeing price growth taper. Numbers from the Toronto Real Estate Board (TREB) show that prices are still way up from last year. However, sales are declining faster than inventory. They may also be facing downward pressure from the explosive growth in pre-construction sales.
Condo Price Growth Is Decelerating
Toronto condos are still nowhere from cheap, but they’re having trouble moving the needle. The benchmark price of a condo across TREB was $460,200, virtually flat from the month before. The annual increase is still 24.22% according to TREB. In the 416 the benchmark reached $479,800, a 25.98% climb compared to last year. TREB appears to be mixing old and new benchmark methodologies, which overstates growth. So the update might look a little weird to those that worked with the old numbers.
Numbers from the Canadian Real Estate Association (CREA) show price deceleration. Growth appears to have peaked in May 2017, at a 29.13% 12-month price increase. The 12 month growth in September was just 22%. Don’t read this wrong, that growth is still yuuuge. It’s just tapering very quickly. You didn’t expect prices to grow at that rate every year, did you?
Editor’s note: We’ll be doing a full comparison of the change in benchmark methodologies, but feel free to skim the Vancouver condo report for a brief overview of the changes.
Condo Sales Decline 27.5%
Condo apartment sales across TREB continued to slide. TREB reported 1,890 sales, a 27.5% decline compared to the same time last year. Breaking that down, 1,362 sales were in the 416 – a 23.2% decline from the same time last year. In the 905, there were 498 sales, down 37% from the same time last year. There’s been a lot of talk about falling sales, but this is a normal market mechanic in my opinion. The higher prices climb, the less people will be able to afford them. There’s also increasing buyer gridlock, because you can’t really upgrade as easily in a hot market.
New Condo Listings Decline 6.4%
The number of condo listings in Toronto are actually lower than last year. TREB reported 3,505 new listings, a relatively seasonal jump of 20% from the month before. This represents a decline of 6.4%, when compared to the same month last year. In terms of active listings, which are total listings available at month end, TREB reported 3,927. That’s a monthly increase of 9.29%, and an annual decline of 0.95%. Inventory did decline, but not nearly as fast as sales did.
Inventory is down, but sales are dropping even faster. That said, it’s expected that price growth would decelerate here – as buyers get more options. Our friends at condos.ca pointed out, there’s almost 17,000 pre-sale condos slated to hit the market by the end of November. This flood of inventory won’t provide immediate relief, but will convince a significant number of potential condo buyers to stay in their rentals/mom’s basements until they’re complete. The impact will likely be fewer buyers entering the resale market, and further downward pressure in my opinion.
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