March 22nd, 2018 | Market Watch
2018 Market Update & Analysis – Buyer Spring Training Seminar
What’s happening in today’s Toronto Real Estate Market?
There’s some data that needs to be taken into consideration when we talk about the current Toronto Real Estate Market.
Here are some numbers that will blow your mind:
- We are facing the lowest February’s sales since 2009 (5125) across GTA.
- February’s ratio of Sales-To-Listings is up to 38.7%, this means that we are in a buyer’s market.
- The average selling price is set to $767,818, which decreased by 12.4% compared to last year.
- The average DOM (Days-On-Market) for housing in the GTA is 25.
- Sales in January 2018 decreased by 35% compared to January 2017.
- Condo sales accounted for 38.6% of February 2018 market, this is the highest ever registered!
- 2018 condo listings increased up to 26% in C01 & 6.5% in C08 compared to 2017.
- The average DOM for condos in 2018 is 15-18, this means that they are selling faster than homes in the overall market.
- Sales-To-Listings for downtown condos is approximately 70% in C01 & C08. This is indeed, a strong Seller’s market.
- The average selling price increased by 70-100K from February 2017 for similar sized/located condos.
- The biggest losers are York Region/905’ers/outskirts, this is due to the “Earthquake” factor.
- Remember that 3 months of supply is healthy – too much or too little is not good.
But how did we get here?
To better understand the current situation let’s look back at 2016 and into 2017:
In 2016, as you know, prices were on the rise and condos were still second to houses. Indeed, housing prices in 2016 saw massive gains of 10-25% compared to 2015.
But here’s where it got crazy. In the first three months of 2017, housing prices increased by 30-50% compared to 2016. It was a perfect storm: we faced all-time low supply, massive demand, foreign Buyer influx, low-interest rates, and the Spring market.
To solve the situation, in April 2017, Wynn’s government intervened with her 16-point plan conceived to cool the market and curb the speculation (including foreign-Buyers).
As a result buyers’ perception and confidence came down, sellers became more compromising and the multiple interest rate hikes happened at the end of 2017 and again in 2018 by 0.5% and 0.25%.
What does this all mean?
It’s all relative! Indeed, relative to 2016, 2018 prices are up 12-25% across the GTA.
Condos played “catch-up” as they stagnated from 2008/09 all through 2015/16 and “caught-up” or, better said, corrected by 2017/18. We can state that from January to March 2017 prices were crazy, but it’s all relative, in fact, prices flat-lined but didn’t plunge, they rather increased at a more reasonable and incremental rate. Will be interesting to see the full stats as we finish the first half of 2018.
Predicting the future.
Based on what we’ve seen in the previous and current markets, we can state that early 2018 will be flat, but we will possibly witness a steady growth into mid-to-late 2018.
Condos will probably remain strong with the largest 3-5 year gains for larger units (>800 sqft), but lower cash-flows per month/year; and a good 3-5 year gains for smaller units (<=500 sqft), but higher cash-flows per month/year.
As result, buyers will slowly realize there are “deals” to be had and shift from condos back to housing (as they should) and this will bring housing prices to see gains as we head into Fall, compared to early 2018.
However, we can state that condos will still outperform houses (% wise) – but be careful as we are past the $1,000/sqft mark for many properties already, not everything is a “deal.”
What about rents in Toronto? They will continue to climb!
Other Seminar Notes:
The Buying Process: Post-Purchase
Want to stay up to date on the market? Sign up to receive monthly neighbourhood reports, with sold prices, into your inbox. It’s that easy!
