Toronto Market Report February-March 2018

16 February 2018

Toronto Real Estate Market Report Nov-Dec 2017

Sales Commentary

GTA Year-Over-Year Summary for August

Trying to compare this January’s sale results (down 22%) to those of last year makes little sense. The market was crazy last year- and irrational too. Far better to look at TREB sales for January in 2016 and 2015. When you compare; 2018 sales were 13% lower than 2016 (the record sales year for TREB) and 7% lower than 2015 (when TREB recorded 100,000 sales – what we are forecasting for 2018).

In terms of new listings, January was up by 17% over January of 2017. But new listings were 4% and 10% lower than for 2016 and 2015! While it is still early, we have not seen any indications to support the view that 2018 would be the start of a major market correction. What we have seen is the emergence of two distinct markets: 416 and 905 area codes. New listings for January of 2018 in 416 are down by 4%! In 905, new listings are up by 31%!

The Toronto hot spot is the downtown condo market. While January sales are 19% lower than in 2017, new listings are also lower by 18%! When you compare the sale numbers to January of 2016 and 2015, sales were 4% lower in 2016 but 13% higher than in 2015. At the same time; new listings are lower than 2016 and 2015 by 29% and 27%. This lack of supply has raised the median price of a downtown condo to $560,000 this January from $494,000 last year.

We expect sales to run consistently behind 2017 until May when we will outperform last year’s market. There are plenty of buyers waiting for new listings to enter the market. Sellers just need help in pricing their property.

Downtown Condo 
January Sales Vs New Listings

Toronto Downtown Condos Sales Vs New Listings

This chart compares January Sales to New Listings for the past four years. When the sales-to-new listings ratio moves higher, average annual percent change in home prices generally trends higher. When the sales-to-new listings  ratio moves lower, average annual percent changes in home prices generally trends lower. The market was balanced in 2015 and 2016. It was a  Seller’s Market in 2017 and 2018..  Source: Toronto Real Estate Board

390 Cherry Street: Gooderham Condos

This month we looked at sales in the Gooderham Condos, 390 Cherry St. First registered in 2014, it consists of 328 units located among the shops and restaurants of the Distillery District and sits atop one of the original red brick warehouses. The one-bedroom unit we tracked has a locker, nice balcony, but no parking. It first sold in 2016 for $360,000 (after 57 days on the market). It then sold 18 months later at the end of 2017 for $515,000 in just 5 days. That is an increase of just under 40%. At 503 sf, the price is a $1,000/sf.! The two-bedroom, two-bath unit has a locker, parking and balcony. It first sold as an assignment in 2014 for $510,00 - under $600/sf. It sold again, at the end of 2017 for $762,000. The increase over the period was 13% per year. At 882 sf, this works out to a price of $865/sf. Currently there is only one unit for sale, a one bedroom plus den at $900/sf. Points to be made are: 1) condo prices have not declined from April of 2017; 2) condo units under $500,000 are in huge demand; and 3) developers asking a $1,000 per sf. for pre-construction condos may not be that far ahead of the resale market.

Rental Commentary

Last January we had 800 condo units leased in the downtown market. We were forecasting less rentals in 2018 because we assumed tenants would not move and would thus assure themselves of a rent increase of just 1.8%. at a time when the market for vacant units is rising much faster. So, we were surprised to see 1,000 units leased in January - three times the size of the resale market!

Normally, rents are lower at this time of year. But we are seeing rental prices equal to those of November. The studio market is averaging $1700 per month. The most popular one bedroom goes without parking or den and continues to rent at $2,000 per month on average. One plus den rents are beginning to approach the two-bedroom market. It is apparent that these units are being used for sharing by two individuals. Rents for these units are now in the $2200 to $2300 range.

The two-bedroom market ranges from a low of $2300 (down from year-end) to a high of $3400. The big change in the rental market is more three-bedroom units were leased. Over 60 (for the first time ever) at an average price of $3400.

When we track this market, we look at days-on-market and the ask vs. lease price. Across the board, we are seeing the days-on-market ranging from 9-19 days, depending on the unit size. However, the ask-to-lease price is at 100% across the board.

TREB MLS® Average Price
Monthly Time Series with Trend Line

Treb MLS Average Price Toronto 2018

This chart plots the monthly MLS® average price since January 1995. The blue line shows the actual average price. The red line is the trend computed using a 12-month average, which exhibits no seasonal variations or other irregular fluctuations. A substantial change in actual average price must occur to change the direction of the trend. 

Want to stay up to date on our monthly market reports?