TREB reported 12,077 sales through the MLS system in March 2017. This is 17.7 per cent more properties sold than last year. The annual sale growth was strongest in the condo and detached segment for the whole TREB market area. Condo sales have gone up by 29 per cent compared to March 2016, while the number of sold detached properties has increased by 14.3 per cent.
And while new listings were up by 15.2 per cent compared to March 2016, the rate of their growth was still slower than the rate of the sales growth. The number of active listings in March 2017 was 7,865 which is 35.2 per cent lower than the 14,795 properties listed in March 2016.
Due to the low supply, the annual rates of price growth continued moving upwards in March. The average price for a detached house in the 416 area has climbed up to $1,561,780. Buyers paid $550,299 on average for a condo in the City of Toronto, which is 32 per cent more than in March 2016.
After returning from Real Estate conferences in two of the big cities of the US, Chicago and New York where the subject was investing in Toronto as a Gateway City, I searched for the reasons that the Toronto Market is having the pressure it is presently experiencing.
In Chicago, I asked what their net immigration was at present and was told that it was in the minus category and comparing it to Toronto’s almost 100,000 plus a year, it was easy to see where the pressure was coming from…Now, don’t jump on the Foreign buyers bandwagon before you remember that the Ontario economy seems to be the strongest in Canada and many searching for the oil gold rush are returning to their homes.
The New Yorkers looked at the extreme costs of ownership in their City and some of my well heeled friends are renters in the City and owners in the countryside. Rental is an option that was never part of the Canadian dream but is common in other major cities and countries.
Do we need an adjustment in our thinking? Do we need to adjust to a new normal??
March 2017 was another record breaking month. We saw listings come out on the market and sell for record highs in record time. This seems to be the time of the bully offer. Frustrated buyers who have lost one too many times on offer presentation date are now resorting to submitting a bully offer in hopes of securing a property. This is driving prices even higher because in order to entice a seller to even look at a bully offer it has to be for a ridiculous amount. An amount that makes the seller feel that no money has been left on the table and in most cases these frustrated buyers are just competing with themselves.
Lots of talk in March by all thre levels of government about the housing market here in Canada and particularly about the runaway annual appreciation levels/affordability in Toronto and Vancouver. Toronto experienced 33.2 per cent appreciation from March 2016 to March 2017. Appreciation like that is always going to attract the attention of politicians. Even rental rates are soaring. Although this is really a supply side issue, expect to see the Ontario provincial government to alter the current rent control policies, a potential foreign buyers’ tax and even a vacant home tax. You just know that there is a provincial election in the next year – politicians want to be seen as doing something to gain votes. Let’s hope that they think these policies out and avoid any unintended consequences that will hurt the overall economy.
As my colleagues rightly say, the “New Normal”, ”Bully Offers”, ”Foreign Buyers tax”.
There are so many variables fueling the Toronto real estate market right now. And, when I show up to presentations and a Seller brings up all the articles in the newspapers about a correction or a bubble bursting I tend to think to myself, newspapers have to sell stories. Realtors are actually living, eating and sleeping this market. It has been a strong market for the last decade but is it the hottest it has ever been? Yes it is. Amongst some of those fueling factors are immigration, interest rates, the fact that Toronto is still undervalued in the eyes of an International investor, baby boomers, and local buyers that want to either get into the market, move up, down or even laterally.