After only two consecutive months of negative variances (as compared to the same month the year before) it may be premature to pronounce that the Toronto resale market place is moderating, but with early August data indicating further negative variances, it is a safe conclusion to draw.
In July sales dropped to 7,570 properties sold; a 1.5% decline compared to the 7,683 properties reported sold in July 2011. In June reported sale were 5.4 percent fewer than June 2011. July’s sales were 19 percent fewer than June’s 9,422
The Toronto residential resale market is not performing in a homogenius fashion. Sales results in Toronto’s 905 districts remain stronger than in the 416 areas. July results were no exception. The sale of detached homes was down by 4 percent in the 416 area, and down only by 1 percent in 905. In the case of semi-detached properties sales were down by 14 percent in the 416, but in fact showed a 2 percent positive variance in the 905. Townhouses sales were even more dramatic: a decline of 5 percent in 416 and an increase of 24 percent in the 905. Condominium apartment sales were down in both areas: 2 percent in the 905 but 13 percent in the 416.
It would appear the cost of purchasing a house in the 416 and 905 districts is responsible for this disconnect. For example a detached house is $200,000 less expensive in the 905 compared to the 416. In addition, an average a buyer in the 416 areas will spend an additional $6000 (based on the average sale price) for the municipal land transfer tax. These factors are no doubt driving buyers from the City of Toronto into the suburbs.
New listings in July increased by 11.9 percent compared to July 2011. In 2011 there were 12,407 new listings. This July that number increased to 13,888. As a result, the number of active listing is also higher than a year ago. Moving into August there were 20,318 active listings, a 16 percent increase from the 17,515 that were available in 2011.
In June it took 26 days (on average) for properties to sell. Notwithstanding moderating market sales numbers, this was the same number of days that properties spent on the market in July 2011. In June all sales took place in 22 days. What July’s results indicate is that even though fewer sales are taking place, those buyers that in the market continue to make quick decisions.
The most active market areas remain the eastern districts closer to central Toronto, averaging 15 days. As a whole the properties in eastern Toronto districts sold faster than anywhere in the GTA except for York Region, where all properties sold in only 21 days. Rapid sales in the eastern districts reflects the fact that Toronto’s least experience properties (on average) are located there.
Moderating sales have not affected overall average sale prices. The average sale price for July came in at $476,947, a 4 percent increase compared to July of 2011 which was reported at $458,646. Central Toronto continues to be the most expensive location to buy property. In July the average detached house sold for $1,178,762. For the City of Toronto as a whole the average detached home sold for $752,431, 36 percent less than in central Toronto. The same is true for semi-detached homes. It cost 17 percent more ($620,334) to buy a semi-detached house in central Toronto than in the rest of the City ($526,979). The least expensive housing type to purchase are condominium apartments. The average sale price for condominium apartments in the City of Toronto for July was $347,996. In the western districts the average sale price was only $290,458 and even less in the east at $236,005. Condominium apartments in the central districts are slightly more expensive at $404,143. Notwithstanding these lower average sale prices, sales on average took 32 days to complete.
A number of factors are responsible for the changing Toronto and area market place. During the spring market sales came in at record pace. This suggest that many buyers may have accelerated their decisions to buy, particularly in light of the record low interest rates. Stricter mortgage leading guidelines have take some potential buyers from the market. The new rules came into effect in July. Rising resale prices (and in the City of Toronto the additional land transfer tax) have made home buying difficult for some buyers. This in turn is resulting in larger inventories, further taking some of the acceleration out of the market.
Going forward the key to the successful sale of properties will be Seller expectations. Sellers will have to adjust to the fact that this is no longer the spring market. Buyers already know it.
Prepared by: Chris Kapches, Senior Vice President and Legal Counsel
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