Toronto

Toronto Detached Real Estate Sales: Worst November Since The Great Recession

Toronto detached real estate sales are falling off a cliff. Toronto Real Estate Board (TREB) numbers show November prices are just off of last year. That’s the least important takeaway from the numbers. Instead, detached sales falling to Great Recession levels and high inventory is the big story.

Toronto Detached Real Estate Prices Are Flat

The price of a typical detached home across Greater Toronto is little changed from last year. TREB reported the typical detached home price fell to $910,100 in November, down 0.28% from last year. The City of Toronto saw a benchmark of $1,111,000, up 2.1% from last year. Yes, even the city is looking at a real loss once the benchmarks are adjusted to inflation next year.

Toronto Detached Benchmark Price

The price of a typical detached home across the Toronto Real Estate Board, in Canadian dollars.

Source: TREB, Better Dwelling.

Toronto detached real estate is seeing improved price growth. Both TREB’s 0.28% decline, and the City of Toronto’s 2.1% increase are better than last month’s number. That’s encouraging, but still not high enough to call a trend reversal. Much like the composite, the positive read is less of a positive price movement. Instead, it has to do with a less rapid decline this year.

Toronto Detached Benchmark Percent Change

The 12 month percent change of a typical detached home across the Toronto Real Estate Board.

Source: TREB, Better Dwelling.

The median sale price of a detached home is higher across Toronto. TREB’s median sale price was $845,000 in November, up 3.17% from last year. The City of Toronto saw a median sale price of exactly $1,000,000, up 5.31% from last year. The median sale price is much more volatile than the benchmark, but responds much faster.

Toronto Detached Average Sale Price

The average sale price of a detached house in the Toronto Real Estate Board.

Source: TREB, Better Dwelling.

Average Sale Price Is Up Over 1%

The average sale price of detached real estate climbed across Toronto… a little. TREB reported an average sale price of $1,008,768 in November, up 1.3% from last year. The City of Toronto increased to $1,301,382, up 1.8% from last year. Worth remembering that both of these numbers are coming in below CPI. Heck, they’re coming in below target CPI.

Toronto Detached Average Sale Price Change

The 12 month percent change of average sale price across across TREB.

Source: TREB, Better Dwelling.

Fewest Detached Real Estate Sales For November Since 2008

The number of detached homes sold dropped to a new multi-year low. TREB reported 2,665 sales in November, down 14.2% from last year. The City of Toronto represented 705 of those sales, down 12.5% from last year. We’ve heard real estate agents say this year is just an illusion compared to last year’s pre-B-20 “rush.” That doesn’t make a whole lot of sense, since this November’s sales are 14% lower than the 10 year median number. Heck, this was the worst number for detached sales in November since 2008.

Toronto Detached Sales Vs. New Listings

The total number of detached sales, compared to the number of new detached listings per month.

Source: TREB, Better Dwelling.

Detached Inventory Is Lower Than 2017, But Higher Than Normal

The number of new listings of detached homes for sale fell across Greater Toronto. TREB reported 5,367 new listings in November, down 27.66% from last year. The City of Toronto represented 1,256 of those new listings, down 25.76% from last year. The drop in new listings helped to pull total inventory down.

The number of active detached listings fell compared to last year, but were pretty high for Toronto. TREB reported 10,001 in November, down 5.65% from last year. The City of Toronto represented 2,000 of those listings, down 6.67% from last year. Active listing data only goes back to 2011, but it’s the second highest November since then. This month’s number is over 46% higher than the median 5 year November trend.

Toronto Active Detached Listings

The total number of detached listings available.

Source: TREB, Better Dwelling.

Toronto’s detached market is showing price improvements, but the volume is way too low. We’re seeing higher than typical inventory, and multi-year lows for sales. That means fewer people are willing to validate the higher prices. First comes volume, then comes the real movement. Until we see a real volume surge, prices haven’t decided which direction they’ll head in.

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37 Comments

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  • Reply
    Land Sark 1 month ago

    Detached homes aren’t as important as condos, which will soon be more valuable than a detached home. The problem with a detached home is you have land, which you don’t have to deal with if you own a condo. For those too dumb to know I’m being sarcastic, I’m being sarcastic.

    • Reply
      Mtl_matt 1 month ago

      Technically you own a few square inches, no? That’s somehting…

  • Reply
    Ian 1 month ago

    Treat houses like financial assets, they act like financial assets. That is, first comes the volume, then the price. Higher prices due to an inventory shortage doesn’t mean the market accepts higher prices, it means a few people did. If we get an exogenous shock, we end up worse off.

    • Reply
      Trevor Hare 1 month ago

      Best description of the situation I’ve heard. Artificially low interest rates have turned housing into a financial instrument, act accordingly.

    • Reply
      Kay 1 month ago

      The best selection of words Ian , can’t explain it any better might be I will plagiarize it somewhere 🙂

  • Reply
    Pookie 1 month ago

    Rent control was recently lifted, which means they can now raise the price to accommodate cap rates. Renters are screwed, and prices will launch higher.

    • Reply
      Grizzly Gus 1 month ago

      Only for units that do not exist yet, and and those that will be joining the record supply that is already underway. Today’s commie landlords will still be subsidizing my life style for the foreseeable future.

      • Reply
        Grizzly Gus 1 month ago

        Correction – I think some of the units that are under construction today will be exempt from rent control as well.

    • Reply
      JJ 1 month ago

      I disagree with this statement from a macro perspective. I believe rental rates are a big part of the argument that “housing prices have detached from income growth”. How high can a landlord increase rents before people simply choose not to live here?

      No one is going to pay $5,000 a month for rent when they are only clearing $7,500 (numbers made up, obviously). At some point people will say enough is enough and landlords will be stuck holding the bag.

      • Reply
        Kay 1 month ago

        I will add .. which I saw personally the Ad posted for $3500 (it was million$ double garage new home in Oakville) they kept listed for rent for 4 months .. the owner keep paying mortgage for 4 month i think its about 14000 loss already then he rent it to minimize his loss at $2800 .. the House worth is decreasing now .. so he is adding more loss every month .. so he list it back to sell .. the trend will become friend

      • Reply
        Grizzly Gus 1 month ago

        Agree with that JJ. Ultimately, people who rent in the city, work in the city. Average rents cannot exceed average incomes. If rents get to a point where they would have zero quality of life they will move elsewhere. Personally, I would rather move into my parents basement if it meant I would have disposable income again.

        • Reply
          Tom Wolfe 1 month ago

          And therein lies the rub.

          $3000 a month demands an annual income (after tax) of about $170,000, or $85,000 each. That is considerably higher than what the typical Canadian family earns but many manage it.

          Consider that as a mortgage payment instead. Project the house price. Save (don’t take from a parents HELOC) for a down payment too. House prices need to normalize so people can buy them to *live* in.

          It’s not an ATM or a golden ticket to the perfect ig lifestyle.

          #blessed (gag me with a spoon)

          • Tom Wolfe 1 month ago

            correction income of 170K before tax. #typo

  • Reply
    rustinpeace 1 month ago

    seems like most people I talk to will wait for summer to list their homes. On the other side I dont think buyers will come out in droves. I think summer will see a huge glut of inventory

  • Reply
    Grizzly Gus 1 month ago

    I just saw this on facebook the other day, and not sure if its a new scheme or not. But it looks like developers are now offering to lend you a down payment to buy their units. This video implies you do not have to pay it back until you sell. Guess it beats lowering your prices by 20%. Does anyone have an Intel on this kind of arrangement?

    https://m.facebook.com/story.php?story_fbid=2445772468771807&id=117248674957543

    • Reply
      Bluetheimpala 1 month ago

      Thanks Grizz, this is very reminiscent of the US before it imploded if I can recall…builders becoming bankers/lenders is an act of desperation in my opinion. Find some new form of financial alchemy to fill in the cracks until then entire wall just falls over. Also to note, this ‘scheme’ is basically what companies are doing all over the world to keep the gravy train flowing; lending their customers the money to buy their product. It gets buried as a liability but not in the same tier as bank lending so it isn’t used when calculating leverage/health metrics. Carillion was doing something wonky like this and then went bust overnight. If someone has to lend you money or finds ways for you to take on new leverage just to buy the product that should be a red flag. Tick tock. BD4L.

      • Reply
        Lloyd 1 month ago

        I like your insights Bluetheimpala. They are precise yet concise and full of good intelligence. Thanks

      • Reply
        Smaug 1 month ago

        I swear that article belongs in the Onion.

        While OSFI and CMHC clamp down on mortgages going to those with no down payment, we have federal and provincial “support programs” to help people buy homes… with no down payment.

        The really funny part is a little further down when they talk about the maximum income allowed under the program. Not minimum, maximum. If you make any more than $89K, that’s it. You don’t qualify. You have to make less. The rules are really “stringent”. Well that’s a relief.

      • Reply
        Mtl_Matt 1 month ago

        Jfc. 485k for a 985 s.f. condo is an affordable unit?

        • Reply
          SUMSKILLZ 1 month ago

          That was a really good price in TO and its a big condo too. Montreal is silly cheap, cheap, cheap. Numbers everywhere else look unimaginable to Montrealers. Don’t feel bad, we feel the same way about your high income and asset tax rates.

      • Reply
        Tom Wolfe 1 month ago

        ladders go down too…

        • Reply
          Tom Wolfe 1 month ago

          Might be grounds for a law suit claiming that leveraging FOMO was unjust enrichment.

    • Reply
      CS 1 month ago

      The Region of Niagara was offering this, but the money has run out.

      My friend is a bank manager and said she has seen so many people come in having to buy houses with their parents. 4 incomes needed to get approved for 1 house/mortgage….

      And one couples assessment came in 70000 below sale price. Ouch!

      Can you imagine, taxpayers are loaning out interest free down payments to people who cant even afford their houses.

      If the market tanks and all equity is list, or if they foreclose, i dont know who is first in line to get their money back, the bank or the government with their interest free loans????

  • Reply
    SUMSKILLZ 1 month ago

    Toronto, Toronto, Toronto..okay, we get it. But what about the bedroom communities that surround it? That scene feels worse to me. The 2017 run up in the ‘burbs was definitely more dramatic than TO.

    Of course I have no data to back it up. But I dog walk, run and bike many Aurora kilometers a week, and the same listings are still there week in and week out and not a red “Sold” sign in sight. Many of the prices I see are completely stupid nonsense but others I feel are quite reasonable and these homes are also not selling as well. I was seeing the odd open house in October, now even with new listings, they have seemingly vanished. A sort of eerie quiet has emerged very quickly.

    • Reply
      Andrew Jerabek 1 month ago

      Unfortunately # of people willing to sell for a fortune and nothing less, and # of people willing to capitulate, are combined into a single inseparable figure. The rising second figure is what I’m interested in, but the first figure eclipses it.

  • Reply
    Tom Wolfe 1 month ago

    ‘The price of a typical detached home across Greater Toronto is little changed from last year. ‘

    That is like saying the price fruit is little changed from last year. The statement is true if a grape cost 10 cents in 2017 and and an apple costs 10 cents in 2018. Fruit still costs 10 cents; no change.

    $1,000,000 in 2016 purchased a piece of land with a house that would cost you $30,000 to put in a bin. $1,000,000 in 2018 will buy a similar piece of land with a livable house, saving you $300,000 to build a house to live in. That’s not the same. That’s a change of almost 40%.

    • Reply
      Bluetheimpala 1 month ago

      This is a good insight. I called them ‘mortgage+’ because everyone was buying a $1M place with $200K down and then getting a loan against the ‘value’ from other lenders assessed at $1.2-1.4. G&M did an article way back looking at a TO house with some crazy loan to value after two alt lenders allowed for 2 HELOCs. Sure people are still buying places for $1M but as you noted these are good homes that have been updated and maintained. Just go online and see what everyone is trying to schlep; disgusting boxes that require guts…does anyone think they can sell these? Tick tock. BD4L.

  • Reply
    DB 1 month ago

    Lets face it….Foreign buyers are not going to go away, they will always be here and so what type of foreign buyer is good for Canada.
    Maybe the Gov’t has it wrong about the foreign buyers tax….by keeping it we have eliminated the honest hard working foreign investor and allowed the corrupt who scoff at the tax as nothing to be concerned about..We have just eliminated their competition for them by making it harder for the honest transparent foreign buyer to purchase here; leaving the field clear for those criminal elements where money is so abundant and needs to be hidden. Some of them make so much money it just keeps stacking up by the millions and so what is in place to prevent these criminals ( a cancer really ) from getting a foot hold here and making it harder for most of us in the long run…Please don’t tell me its the CRA or law enforcement when was the last time we saw anything in the news about a clamp down on this,,maybe once or twice recently by there are thousands here hiding money in RE keeping prices artificially high, Its close if not actually effecting the foundation of the RE structure in this country..if its only going to be boom or bust, its only good for us if its boom..but now its bust and the risk of RE collapsing is so great now it could be a security risk to our financial system or at least a possibility. The Feds have to act on this or the flip to the negative side will be so severe it will have a negative long lasting effect on everyone.
    Maybe it’s too late..is the genie is out of the bottle.

    • Reply
      John 1 month ago

      I’m sorry, what exactly does a hardworking foreign investor bring to the Canadian market aside from inflated assets?

    • Reply
      someguy 1 month ago

      Let’s face it, armed robbery is never going away, it’s always going to be here so what kind of armed robbers are best? If the government has laws against armed robbery, then only the real hard asses are going to commit armed robbery, and there will be less room for the average, friendlier, “just give me your wallet” sort of thing. By having those laws, we filter out the somewhat decent run-of-the-mill criminals, and leave only those who are more desperate, psychopathic, and violent.

      • Reply
        MH 1 month ago

        Just was told about an example of a foreign “investor” buying two dozens of condos in Toronto paying cash. Canadian real estate is the best. You know… open for business…

        Carson Block in recent interview: “We tend to think of Canada as being first world, but in some ways they’re a little more ‘clubby’ than we’re used to”.

  • Reply
    pranav 1 month ago

    Condos that are cashflow -ive (which are a majority now) will correct downwards. Cashflow+ (large houses with basement apartment) will continue to attract investors. With rent control abolished in Toronto for new houses, and new basement apartments which have never hit the market, the rents will remain at elevated levels as builders will be happy to drag their feet to add supply and renovated basement apartments can charge market rent every year.

    Cost of construction today is a lot higher than it was a decade ago and greed of builders is a lot higher too. If you think you can rent for cheap if you are new to the city, and can buy in when there is a dip, think again.

    Quite a few detached properties in etobicoke and scarborough that are hugely cashflow+ at current levels.

    The BD authors and other wannabie owners can cry over affordability all they want. Bottom line: Home ownership is a privilege, not a right. This change has happened as USA has closed doors for permanent residency, thus the spotlight for Asians to immigrate to is now Canada.

    With 100,000 of 400,000 immigrants coming to Canada settling in Toronto and planned max supply pegged at 80,000/yr, keep believing the naysayers who post bearish articles every other day on Better Dwelling.

    I hope the author has the guts and numbers to respond to this.

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