The Toronto Real Estate Board reported very strong numbers for the month of May. The only change to the market place in May was the number of listings that came to market and the longer term impact that more supply will have on market conditions. Until very recently demand outdistanced supply. We are beginning to see the very first signs of supply catching up to demand.

In May 10,850 residential properties were reported sold. This number represents the most sales reported in any month in 2012. Sales in May of this year exceeded sales as compared to May of last year by 11 percent. There were 9,766 sales reported in 2011. Year-to-date 41,651 residential resale properties have been reported sold. If the current pace of sales continues, sales for 2012 might top the 93,193 sales reported in 2007, the best year in the history of the Toronto and area marketplace.

What is emerging is that sales growth is the strongest in the 905 regions. Sales of detached and semi-detached homes in the City of Toronto are up by 6 percent over last year. In the 905 region sales of similar types of properties are up by 13 and 12 percent respectively. Surprisingly the same is true for condominium apartments. In the City of Toronto sales were up by 5 percent, and 12 percent in the 905 region. In absolute numbers, however, many more condominium apartment sales take place in the City of Toronto (1,632) than in the 905 region (704). There are a number of factors responsible for these variances. Generally property values are less in the 905 region than in the City. There is more supply. There is no additional land transfer tax. In the City of Toronto the municipal land transfer tax adds approximately $6,000 to the averaged priced property.

May saw one of the largest influx of new listings in many months. 19,177 new listings came to market, 20.2 percent more product than the 15,949 new listings in May 2011. Coupled with the 16,436 new listings in April, 35,613 new listings came to market in the last two months. During this same period 20,978 residential properties were reported sold. Approximately 15,000 properties remain unabsorbed heading into June. These 15,000 unabsorbed listings are reflected in the 20,462 active listings at the beginning of June. This is a 10 percent increase compared to the total number of available listings at the beginning of June of last year. If new listings continue to increase at May’s pace, price growth will moderate, as all but the most exceptional properties will take longer to sell. The months of supply data will be the statistic to watch over the coming months.

Given the foregoing it is not surprising that days on market data provided by the Toronto Real Estate Board is at record levels. In May all residential properties that came to market sold in 21 days. Last May it took (on average) 23 days for all properties coming to market to sell. In Toronto’s hot, and less expensive, eastern districts, sales took place in less than 17 days on average, even as low as 9 days in some of the eastern sub markets.

The average sale price in May came off the record average sale price of $517,556 achieved last month. May marked the end of a string of record breaking months. May average sale prices subsided slightly to $516,787, yet still almost 6.5 percent higher than the $485,362 average sale price reported in May of last year. Sales of properties having a sale price of $1 Million or more did establish a new record. In this category of homes, 668 properties were reported sold, eclipsing the record established just last month. In April 643 properties in this category sold. It should be noted that 100 properties had sale prices exceeding $2 Million, also a record.

Central Toronto remains the most expensive location to buy a home in the greater Toronto area. The average price of homes in Toronto at $568,768 is 12 percent more expensive than the averaged price property of $516,787 for the entire greater Toronto area. In central Toronto average prices rose to $681,261, 32 percent more than greater Toronto prices. And this includes condominium apartments. A detached home in central Toronto now costs $1,249,967 (almost identical to April’s price), and a semi-detached home will cost a buyer $766,440. As has been the case throughout 2012 the most accessible properties for buyers are available in Toronto’s eastern districts. The average sale price for all eastern districts in May came in at $439,376, well below the average Toronto resale price of $568,768.

Going forward the key to the way in which the market will evolve is supply. As this report has indicated, May saw one of the largest supply of new listings in years. A continuation of a large number of new listings over the remaining months of 2012 will cause the market to moderate. Prices will level off as buyers have more choice.

*feature image source: citysightseeingtoronto.com

Prepared by: Chris Kapches, Senior Vice-President

April was one of the strongest months on record, adding to the momentum and the 9,690 residential sales reported by the Toronto Real Estate Board in March. The story remains unchanged. Strong market conditions continue to be driven by record low mortgage interest rates and a supply of resale properties that is insufficient to meet the demand. Although the number of properties coming to market is increasing, the supply remains low. As a result new, well priced and well located listings see competition between buyers, all seeking to purchase properties in this environment of low mortgage interest rates.

 In April 10,350 residential properties were reported sold. This is an 18 percent increase compared to the 8,778 properties reported sold in April 2011, and a 7 percent increase over the sales achieved in March. Notwithstanding numerous articles and publications predicting a decline in the Toronto resale market, the 31,109 sales achieved during the first 4 months of 2012 point to a continuing strong, frothy market.

 In April the market place welcomed 16,436 new listings. This represents a 14.7 percent increase compared to 14,335 properties that came to market in the same month last year. Notwithstanding this substantial increase in new listings, given the number of sales, it did not have a dramatic impact on inventory levels at the beginning of May. We entered May with 18,379 available properties, and while an improvement over last May, this supply continues to remain insufficient to meet demand. Last year there were 17,702 available listings at the beginning of May, 3.8 percent less than this May’s active listings. The supply of new listings that came to market in May has not impacted the resale landscape. There is 2.2 months of supply of properties for sale in the greater Toronto area, with some trading areas, particularly some of the eastern neighbourhoods, averaging less than 1.4 months of supply.

Not only was there demand for new properties coming to market, but once listed, they sold very quickly. In April, all residential properties that came to market sold in only 21 days, the same pace achieved in March of this year. Last April all properties coming to market took 22 days to sell. Sales even in Toronto’s most expensive central neighbourhoods took only 22 days to sell, with sales in some neighbourhoods taking less than 20 days. Toronto’s eastern neighbourhoods continue to see the fastest sales pace. Over all it took only 20 days for all east Toronto properties to sell. In some neighbourhoods it took less than 15 days. In the neighbourhoods north of the Danforth all semi-detached houses that came to market sold in a jaw-dropping 7 days. This is clearly not a balanced market. Sales in 30 to 40 days are more consistent with a balanced market.

 It is not surprising therefore that April produced another record average sales price. The average price came in at $517,556, eclipsing the previous record of $501,077 set in March. April’s average sale price was 8.5 percent higher than the $476,802 average sale price recorded in April 2011. A new record for properties having a sale price of over $1 Million was also recorded. 643 properties in this category were sold in April, a 23 percent increase over the previous record achieved in March. It is hard to believe that in just three years this price point for sales has almost tripled. In April 2009 only 216 properties in this category were reported sold. It should also be noted that 92 properties having a sale value of over $2 Million were also reported sold. Although not Manhattan, Toronto’s prices are certainly rising.

A detached home in Toronto’s central districts has become too expensive except for exceptionally high earners or equity-laddened move up buyers. In April the average sale price for detached homes in central Toronto came in at $1,249,613, a slight increase from the $1,235,399 recorded in March. Toronto’s eastern neighbourhoods remain the most accessible for buyers looking to buy a detached house. On average a detached house in east Toronto sold for $560,449, however it cost more than $900,000 to buy a house in the Beaches neighbourhood of east Toronto

The annual principal and interest payments on a 95 percent high ratio loan based on April’s average sale price of $517,556 would amount to approximately $28,000, based on a 3.2 percent interest rate. The average annual household income in Toronto is slightly over $90,000. For the time being mortgage carrying costs remain less than 32 percent of annual household incomes, but only marginally. Continued price increases coupled with an increase in mortgage interest rates would see many buyers, especially first time buyers failing to qualify. The strong Toronto resale market is, due to rising average sale prices, now very dependent on historically low mortgage interest rates for its continued bouyancy.

Prepared by Chris Kapches, Senior-Vice President Chestnut Park Real Estate Ltd., Brokerage

2011 ended strong, with the Toronto Real Estate Board reporting 4,718 residential properties sold for the month of December. This represents a 10.1 percent increase compared to the 4,286 properties reported sold for the same month in 2010. The market landscape remains unchanged. Historically low mortgage interest rates and strong buyer demand fueled the Toronto resale market throughout 2011.

As forecast, 2011 proved to be the second best year on record, behind only the 93,193 residential properties reported sold in 2007. The 4,718 sales for December brought the total sales for the year to 89,347 properties sold. The next best year for reported sales was 2009, with 87,308 properties sold. By all accounts 2011 was an exceptionally strong year.

In December 4,811 new listings came to market. This represents a 13.8 percent increase compared to the 4,229 new properties that came to market in 2010. The new properties that came to market in December brought the total number of properties available for sale for the beginning of 2012 to 12,868, up 14.9 percent compared to the same period last year. Notwithstanding the increase in both new listings and properties available for sale in December, the 12,868 properties available to buyers to start the NewYear is still a historically low number.An inventory of 12,868 properties represents 2.2months of supply. A balanced market is between 3 and closer to 4months of supply.As a result it is anticipated that well priced properties in sought after neighbourhoods will attract considerable competition as the NewYear begins. The unusual warm winter weather we have been experiencing in early January should also act as a market catalyst.

Average days for properties on the market rose in December from previous months. This is not unusual, as December and January are historically the two slowest months in the market cycle. In December all new properties (on average) coming to market took only 32 days to sell. These numbers represent the speed of sales in the entire greater Toronto area. In the City of Toronto the pace was a little faster at only 30 days. On a district-by-district basis, properties in Toronto’s west end took 31 days to sell, 31 days for central properties, and a jaw dropping 27 days for all east properties. The in –demand neighbourhoods continue to be trading areas just east of Toronto’s central core. In particular Riverdale and Leslieville are markets that appear to be on fire. Even in December average days on market for these neighborhoods was only 15 days. No other trading areas in the central or western districts equaled the pace of sales in theses districts.

Although it may be too early to forecast, it would appear that headed into 2012 the pace of sales, at least for the market as a whole, may be slowing. In September and August average days on market for properties was 27days. In October average days came in at 26. In November average days increased to 29. It increased again in December to 32. Notwithstanding this slight slow-down, 32 days on average for all monthly sales continues to be very brisk by historical standards. For example, last December all properties took 37 days to sell.

In December the average sale price for all properties sold was $451,436, down by 6 percent from the sale price of $480,421 achieved in November. The decline in December is common in the annual market cycle. Over 191 properties with a sale price in excess of $1 Million were reported sold. 24 of these properties had a sale price in excess of $2 Million. Conversely of the 4,718 properties sold, 1,258, or more than 26 percent, had a sale price between $300,000 and $400,000. December’s average sale price of $451,436 represents a 4 percent increase compared to the $433,523 average sale price achieved in December 2010.

Forecasts for 2012 are mainly positive. The Toronto Real Estate Board and Canada Mortgage and Housing Corporation’s view is that because of broader economic conditions prices will increase moderately accompanied by slightly lower sales. Sales should see about 85,000 properties sold, and prices will increase over the year by a modest 4 percent. In 2011 prices increased (annualized) by 8 percent, from $431,276 2010 to $465,412 this year. Toronto has managed to avoid the housing market pit falls that have plagues many other jurisdictions, particularly the United States.Markets in the States have been in decline since 2005. If the forecast for 2012 proves accurate, and there is every reason to believe they will, we will enjoy a strong market, punctuated by moderate price increases, which in conjunction with low mortgage interest rates will ensure continued affordability.

By: Chris Kapches, Senior Vice-President, Chestnut Park Real Estate Ltd.