So what really happened to Toronto’s real estate market in July 2017?
First, let’s start with some fancy interactive charts that look at Prices in Toronto (Tab 1) and Sales Volume (Tab 2). Note these stats only reflect activity in the 416 area code.
A Tale of Two Markets
For many years, Toronto’s house market performed significantly better than the condo and townhouse market. Those days over.
- Detached Houses:
- Since July 2016: prices up 8.4%
- Since March 2017: prices down 16.4%, or over $257,000 for the average priced detached house
- Semi-Detached Houses:
- Since July 2016: prices up 1.5%
- Since March 2017: prices down 20% or over $220,000 for the average priced semi-detached house
- Since July 2016: prices up 21%
- Since March 2017: prices down 7% or almost $54,000
- Since July 2016: prices up 24.6%
- Since March 2017: prices down 3% or almost $18,000
The good news is that all sectors are still seeing an overall price INCREASE from a year ago. But the activity and pressure on house prices since the Wynne government introduced the changes in April, has been severe…but condo prices seem to be holding, despite a lower volume of sales.
The house market is now considered to be a Buyer’s Market, where Buyers wield most of the power….while the condo market is still firmly in Seller Market territory.
Pro Tip: This might be an awesome time to sell a condo and move up into a house! It’s been a long time since a Toronto Buyer/Seller was able to take advantage of the market and be in control during both a sale and a buy.
Why is the condo market doing so well?
- Affordability – The condo market started to heat up last fall, as rapidly rising house prices caused more people to move from the house market and into the condo market; that trend continues.
- Investors – Investing in Toronto real estate continues to be a popular option for both residents and non-residents with our red-hot rental market and relatively few options for better ROI.
- Location, location, location – Torontonians continue to want to live near where they work and play, and there’s no denying that many of Toronto’s condos are in prime locations.
The Untold Story
Most of the story for summer 2017 is in the numbers that are not being formally reported – the attempted sales. Attempted sales fall into one of 3 categories:
- Suspended listings – listings that aren’t being actively marketed or shown – the listing contract is still in place
- Terminated listings – listings that aren’t being actively marketed or shown – the listing contract has been terminated
- Expired listings – listings that were on the market for the length of their contract and didn’t sell (at least 90 days)
Here’s a comparison of attempted/aborted house listings between May 1 and August 1, 2016 vs the same period in 2017:
Woah! That’s a lot of houses that didn’t sell! In fact, we saw a 131% increase in suspended/terminated/expired listings over the same period last year. This significant increase in attempted/aborted sales could be because:
- Sellers who were trying to ‘cash in’ on the market realized they had missed the peak of the market and decided to hold onto their properties
- Sellers weren’t prepared to accept the lower prices that we started seeing in the market
- Sellers life circumstances changed
The Big Questions
Is this just a temporary blip in Toronto’s real estate market?
- How long will the sales slowdown and declining prices last? When BC passed the Foreign Buyer tax in Vancouver last year, they saw an immediate effect on prices and sales volume…but one year later, the market is making a comeback with prices up 8.7% from a year ago. Interestingly, Vancouver is seeing much of the same ‘two market’s as Toronto – condo prices in July were up a whopping 18.5% and detached prices a mere 1.9%.
What will Buyers do in September?
- The second hottest real estate market in Toronto is historically in the fall, usually starting after Labour Day and continuing until the end of October. There’s little debate that most of what we’ve seen this summer was caused by Buyer psychology…yes, there was significant government intervention and an increase in interest rates, but most of the Buyers who paused over the summer weren’t directly impacted by those new rules or rates. With so many Buyers taking a ‘wait and see’ approach, it’s almost impossible to predict how they will behave in September.
What will Sellers do in the fall?
- With so many attempted/aborted sales this past summer, many real estate agents are expecting to see an abundance of listings this fall, as those Sellers make second attempts at selling. Will the influx of supply further hurt prices? Will Toronto Buyers, long-starved for good inventory, be tempted by all the new listings and return to the market?
What will happen to prices?
- We’ve already wiped out most of the gains made in 2017 and average prices in Toronto are at October 2016 levels for houses and February 2017 level for condos. I do expect that we’ll see another small decline in August, and (hopefully) some price stabilization in September.
What should you do?
- Good question, and there’s no easy answer. If you’re thinking of buying or selling this fall, get in touch to explore your options.