Last year, many Toronto real estate owners were watching their houses make more than them. This year? Not so much. Toronto Real Estate Board (TREB) numbers show detached home prices are down thousands of dollars in April. The detached price declines also appear to be accelerating, as sales continue to drop and inventory rises.
The Price of A “Typical” Detached Home Is Down Over $114,000
The benchmark price of a detached home made a seasonal climb, but is still down bigly from last year. TREB reported the benchmark detached is now $927,800, down 10.34% compared to last year. The City of Toronto benchmark detached reached $1,109,700, down 9.55% from the year before. Decades of price climbs, and a few months of declines won’t shake too many existing homeowners. Those that bought at peak last year, expecting a quick flip, are learning an expensive lesson.
Source: TREB, Better Dwelling.
The declines add up to some serious damage if you were planning on selling soon. According to TREB’s calculations, a typical detached owner would have lost $114,300 from last year. In the City of Toronto, a typical detached buyer would be down $116,600. Of course, the same paper gain rules apply to losses – you don’t actually realize them unless you sell. Although it’s worth noting that the benchmark declines are currently accelerating.
Source: TREB, Better Dwelling.
The median price, a more common measure used by international buyers, also shows a drop. The median sale price across TREB was $870,000 in April, a 12.99% decline from the year before. The City of Toronto saw a median sale price of $1,080,000, a 15.95% decline compared to the year before. Remember, median prices are not an indicator of what you’ll pay, but a better indicator of dollar flow.
Source: TREB, Better Dwelling.
Average Sale Price of A Detached Home Is Down Over 14%
The average sale price of a detached home is still negative, but a little better than the month before. The average detached sold for $1,030,103 across TREB, a 14.4% decline compared to last year. The average sale price in the City of Toronto is $1,354,719, a 14.3% decline compared to last year. March to April normally see a seasonal improvement, last year being an exception.
Source: TREB, Better Dwelling.
Toronto Detached Real Estate Sales Are Down Over 38%
Detached sales are down across Greater Toronto, from downtown to suburbs. TREB reported 3,451 detached sales across all regions, down 38.4% from the year before. Breaking that down, the City of Toronto saw 819 of those sales, a 34.3% decline compared to the year before. The burbs saw the other 2,632 sales, a 39.6% decline from the year before. Sales can decline for many reasons, including a lack of inventory, but this isn’t the case right now.
Source: TREB, Better Dwelling.
Toronto Detached Real Estate Inventory Rises Over 46%
New listings of detached real estate are declining across the Greater Toronto Area. TREB reported 8,578 new listings in April, a 27.69% decline from last year. The City of Toronto saw 1,811 of those new listings, a 29.39% decline compared to last year. The sales-to-new listings ratio (SNLR), a common way of determining how hot a market, is now at 40% for detached units. That would make it the worst SNLR for an April, in at least five years. CREA classifies a market this low on the border of a “balanced” and “buyers” market.
Despite the drop in new listings, inventory levels continued to rise. Active listings, those that remained for sale at month end, climbed closer to historic levels. TREB reported 10,956 active detached listings, a 46.9% increase compared to last year. The City of Toronto represented 1,909 of those active listings, an 18.94% increase compared to last year. Any rise in active listings while sales drops is generally not great for pushing prices higher. That said, detached inventory is growing faster in the suburbs than the city.
Source: TREB, Better Dwelling.
There’s two thoughts on declines in the segments, both hinging on credit. CMHC analysts believe that mortgage stress tests pushed buyers towards lower priced units. This has sent buyers towards cheaper condos (and sending their overvaluation model soaring). There’s also the belief that credit exhaustion has taken place. In the event of the latter, the market won’t be rebooted without a period of technical correction. Despite the perception that Toronto real estate is a terrible market, only detached units are in a correction.
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Money flows to SFH. The major run up was in this segment with pressure on other segments as a result. Watch towns and semis come down disproportionately and then the condo bleed out in Q1 of 2019…maybe sooner to be honest, everything is happening quite quickly and we haven’t had any real fallout…if prices are deceleratng in this environment what will happen once we hit the foreclosure phase and enter trough? Maybe nothing. What do I know. BD4L.
Classic dumb money trail.
Condos are cheap, relative to detached houses. Those buyers are usually the least informed, and think they can still get in on a trend. Detached buyers, that have more money and often better informed, lead the market.
All agents are saying it’s an excellent time to buy. They all stopped buying the year before last.
Exactly, condos are the cheaper alternative to detached, and often one of the few alternatives that pre-approved and regular buyers can get into. We will know how bad that segment is by end of summer. Even then, it will just be the beginning.
Month over month prices are up. I believe this is a recovery of the detached market. It can’t drop forever.
Over the last decade; Please show me one period where prices didn’t go up MOM between January and May, followed by MOM declines through till august. There is one year where May was down MOM from April……..2017
This, didn’t see it already. Caching maybe? lol. Sorry to echo.
Everyone, repeat after me. Seasonal bumps are useless, that’s why people compare year over year. TREB doesn’t even use the month-over-month on their tables, because it makes no sense. Going into every spring prices rise, going into winter, they fall. This has to do with the way luxury markets sell, nothing to do with analysis.
2006 – Home prices in US peaked in first Quarter of year
2007 – Home prices fluctuated in US, with visible signs of strain showing up in some places, including mortgage backed securities, mortgage origination, and home builders
2008 – By second quarter of year, US was declared to be in a full blown housing crisis.
18 Months from peak to crisis. The patterns are eerily similar now in Toronto
Record sales of pre con condos in 2016-2017 at new all time highs. Record supply hitting the market over the next 3-4 years (provided a bunch more projects do not get cancelled). All of these contracts signed pre B20. Some before rates started ticking up
Normally something is worth what someone is willing to pay for it. In RE something is worth what someone is willing and able to borrow.
Bet the credit cycle.
Most people are too uninformed to understand this point, but it’s 100% the most important issue when determining home prices. Upgrade chain breaks, the whole thing falls apart. Manic buyers push the trend higher, not understanding that they’re the ones paying the premium to push prices higher. Once you run of this segment of buyer, prices rapidly collapse. Example, bitcoin, etc.
The only reason home prices take longer to fall, is the speed and cost of a sale. If it was relatively fee free, it would collapse overnight.
Exactly, that’s a perfect storm. That’s why I don’t expect party to last for more than 2 years.
If you haven’t seen the numbers for those record GTA pre-construction condos here are those:
2016 – 29,132
2017 – 36,429 (60% of those are in Toronto)
This is 25% growth in 1 year.
“Bet the credit cycle” Love it!
The same forces that are currently forcing a correction in the detached segment will do so in the condo segment. If condo prices continue to rise, soon it’ll only be speculators bidding against each other for units as actual homeowners drop out of the condo market. “Investors” already make up half of new condo purchases.
Unlike the detached market, if a sell-off occurs in condos, there will be massive supply available which will cause a rapid and much deeper decline in condos prices. The breaking point for detached was $1.5 million. I don’t know what it is for condos but each month we get closer to it. It’s likely somewhere between $600k – $700k.
If you try to compare to 2010 prices you would see that detach grew way more percentage wise than condos (considerably more). There was no major condo growth until beginning of 2017. The detach market was way more overheated than condos. This could explain why detach segment is so much more vulnerable and dropping while condos holding up.
Also try to do rent analysis. If someone bought a Richmond Hill house in April 2017 to flip and meanwhile renting, they would have negative cash flow of 2-3k (loosing few thousand a month if not more). If someone bought condo in in April 2017, their cash flow would be still negative but measured in just hundreds. Which is sustainable especially if condo was bought by parents for their kids when they grow up and those parents already paid off their own primary mortgage.
So guess which investors/flippers will panic first: in Richmond hill detach or downtown condo?
Canadians seem to be slow to learn. This situation happened already once and many of you or your parents were out of a job for months. Same greed, same approach.. even same excuses. The market is cyclical and heavily attached to wages which are stagnant for a decade. Of course, the market will flourish with 2% rates but you are not US with 30 years mortgages. 5yr term will wipe many families that were already buying via shadow lending, syndicate mortgages or were stretching their budgets to the max to feed FOMO.
Don’t take my word for it. Watch this video from 1989:
https://globalnews.ca/news/2444980/this-1989-documentary-on-asian-investment-in-vancouver-shows-how-little-has-changed/
Thanks for the link.
“Those who don’t know history are doomed to repeat it.” – Edmund Burke
The condo market is pretty much pooched now. There’s enough negative media garble to finally turn off the remaining speculators…the ones with half-brains. And that will only leave a small number of youngsters with parents (downpayment source) that don’t watch the news. Any remaining gains (if any) won’t be enough to cover fees. Mark my words. It may take the summer, but that will be it. Then, the fun will begin.
Unfortunately, I’m always right. 🙂
Meanwhile in Vancouver, people are still flipping condos…
https://www.theglobeandmail.com/canada/article-flipping-of-condo-units-by-insiders-fuels-hot-vancouver-market/
The mentality of the condo flipper. “I am a fool for paying these prices but no worries. I will find a greater fool to pay me more” Always ends well.
You bears are so funny! I already explained here to some – almost every condo project in Downtown Toronto comes with assignment option. Even if investor will change his mind and would like to sell before possession he can do that. I purchased 2 pre construction projects in 2015 in good Downtown Toronto location and its already up 250000 each. Tell me how can I loose with this prices? The demand for Downtown Toronto condos is crazy! Every sale is bidding war! Forget about buying, 10 people applying for your property just to rent it out. Now there will be more condos hitting the market soon but it will never keep up with demand. Not in Downtown Toronto area. So good luck bidding against Downtown Toronto condos.
Good for you . You know what you are doing in RE. commenters here are just fools hoping for crash so they can get out of their basement apartments. I agree, the rental demand is insane out there.
Gains only count if you get those chips off the table
https://twitter.com/ExtraGuac4Me/status/993800713653305346
You’re among the 56% of investors that bought in 2015 that can cover costs. The other 44% can’t. You bought in 2015 but now prices are much higher. Do you think someone that bought a condo in 2017 can cover costs when the unit is completed? The math no longer works for them. That 44% will grow much higher.
I also bought a resale condo in 2015 and am counting my blessings. I’m prepared and completely ok with a rollback in prices since I’ve gained so much already. The writing on the wall is clear.
blah blah blah. everyone here trying to convince a crash. it has been going up crazy for 10 years straight. it will plateau and then go up again. Toronto will have 2 million more people in the next 20 years with green belt limitation. no more sprawl. government will protect the system from crash. suckers that did not get in are now forever renters. almost every detached house in toronto from Oakville to Brampton to Markham to Oshawa has basement apartments. the demand for housing is incredible. I am a landlord and the amount of people that show up for apartments is overwhelming. I’m with MMr – invest in strategic areas and you are solid.
Because…. “this time it is different”
it would be a first in nearly 500 years of major bubbles in world history
you keep up the drivel while we make money in RE.
If you sell assignment you need to pay 50% capital gain from the profit. I will try to close and rent out the condo for at least 1 year. This way you keep much more money in your pocket. You get HST money back plus capital gain calculation is much less.
Prices are coming down not just in Toronto but all other major markets across the world save for Hong Kong. Why? Too expensive. Rents in Manhattan are coming down. Toronto is no NYC and even NYC had a correction in 2008 (not just a plateau) just like every market eventually does.
let’s face it – almost every country out there is a crap hole. either horrible conditions or great conditions for the native population with bigly racism. Canada has its faults but is a great country and they want in – either through RE, legal immigration or walking to the border. Just like Castro did to the USA in the early 80’s with the Cubans the USA is crapping all over us with sending their illegal immigrants to our border. Sponsored by a paid actor/commenter from the Doug Ford campaign.
How is median price an indicator of dollar flow? You have no idea how much dollars exchanged hands with median price. With average price, by definition, average price * number of sales = dollar flow.
Meanwhile in Vancouver:
http://business.financialpost.com/real-estate/vancouver-luxury-property-is-continents-worst-performer
Wait until Doug Ford revokes foreign buyer tax and prices goes back to April 2017.All your other analyses is junk 🙂
Can’t wait for Kathleen Wynee to be thrown out in a month.