Toronto Real Estate Market Update: November 2016
Author: Tracy Ruddell
Despite a myriad of new mortgage rules intended to help cool the Toronto and Vancouver real estate markets, the Toronto market continues to rise year-over-year both in terms of volume of sales and prices.
Let's take a look at November's results for Toronto homes for sale and what this may mean moving forward.
Last month saw a 16.5% increase in GTA home sales and 22.7% increase in prices. This breaks down as a 15.1% increase in 905 home sales over November 2015 coupled with a 23.9% price increase; Toronto-proper saw a 18.8% increase in sales and 20.9% increase in prices.
This double-digit, year-over-year increase trend is expected to continue through the winter, a time when - with the holiday season and Canadian winter weather - sales traditionally dip. Now, we do expect activity to be slower than this past fall but still above winter 2015.
For sellers looking to make a move as soon as possible, this is good news. It's no longer necessary to wait until spring to list in order to maximize selling price. We've seen fantastic prices for sellers in January and February when supply is even lower than usual. If a Realtor is telling you that you have to wait to sell, don't be afraid to challenge this. Any time you wait in this market you will likely see a slightly higher return as prices are going up constantly but you're just as likely to spark a bidding war in February as in April these last few years, if you have a decent property.
Now, there are some common sense guidelines you should follow like avoid listing during Christmas or New Year's week and holding open houses over holiday long weekends. And you may decide to wait until spring for aesthetics, i.e. if you have a beautiful garden that will act as a selling feature when in full bloom. On the flip side, if you're selling a condo - particularly if you're selling in a high-rise with lots of other units that look like yours - selling off-season may be a better bet to avoid competition.
In general, however, while you're still likely to see more buyers bidding in the spring than in the dead of winter, you're also going to have a lot more listings competition and so there's no guarantee of garnering a higher price by waiting for traditional "up-swing" sales periods. Toronto buyers are so hungry that nary a snow storm nor a frigid winter's day will keep them away from a hot new listing.
The bottom line when it comes to timing is to buy and sell when it's right for you. Other than avoiding holidays when many would-be buyers are out of town, don't try to time the market as many of the old rules are obsolete. Just go with what works best for you.
Two of the more interesting statistics in November's sales results are the condo and townhome sales figures - particularly Toronto condos at a whopping 27.9% sales increase year-over-year.
Low mortgage rates and skyrocketing rents have fueled more first time buyers to take the property plunge than we've seen in decades. Between our team at Property.ca and our colleagues at Condos.ca and MrLOFT.ca, over half of our clients are first time buyers and from discussions with peers at other real estate companies in Toronto, this is pretty common.
It's no surprise then the greatest percentage sales increases in Toronto in November were seen in the condo and townhome segment. If you're thinking of buying a condo in Toronto, it's more important than ever to do your research before viewing properties. Visit Condos.ca for the latest Toronto condo prices by individual building and neighbourhood so that you know what (and where) you can afford to buy and also when a unit for sale is over-valued at asking price.
REALTORS ® have been voicing opinions for months now that the latest Government's plans for cooling the market are not appropriate because we see the reality of the market every day, on the ground. I feel safe in saying that most Toronto REALTORS® would agree the main issue here has never been foreign buyers nor local investors. These are all parts of a larger, more complex problem but not the main issues as the media frenzy would have you believe (and the Feds-initiated, impending StatsCan research should show this).
The issue is simple, the solutions are not: supply. Even if mortgage rates rise, driving out a lot of investors and first-time buyers, we'll still have a hot market because population continues to rise in our urban centres at a pace that's far exceeding urban development plans. This is both from immigration as well as local populations who are choosing to stay and raise families in the city. Couple this with ridiculously-high rents and it's easy to see why so many people are choosing to buy.
Jason Mercer, Director of Analysis at TREB agrees, saying that:
"Recent policy initiatives seeking to address strong home price growth have focused on demand. Going forward, more emphasis needs to be placed on solutions to alleviate the lack of inventory for all home types, especially in the low-rise market segments."
The bottom line is that, even with new Government-led initiatives to cool the market and possible increases in Toronto land transfer tax, market conditions are going to moderate at best.
In other words, if you think a "cooling of the market" will equate to price drops, think again. Our opinion is that, at most, we'll see prices flatten but what's even more likely (at least in the Toronto freehold market) is a moderation in the rate of annual appreciation. So, instead of a 20-30% increase in Toronto home prices year-over-year, we may see more moderate increases of, say, 10-12% if the Government continues to impose restrictions. In short, you're very unlikely to save money by waiting to buy.