This past year could be described as the year of the condo. Condominium segment thrived as all the other segments experienced a roller coaster ride in 2017.
When we first entered the year with record sales and prices rapidly growing, everybody was in nervous anticipation of new government policies that were to bring some cooling to the market. By the end of the year, this government-induced cool-down proved to be more of a psychological thing than anything else, stopping buyers only for a short period of time, awaiting the result of Foreign Buyers Tax effect.
Jim Burtnick, Broker, SVP-Sales at Sotheby's International Realty Canada says that the December figures showed that we're back on the upward trajectory:
"Up-down-and-slowly-back-up-we-go" - A catchphrase I would use to describe the 2017 real estate marketplace. A crazy 1st quarter of price growth. Then government intervention put the market on "pause" while the consumer waited to see what effect these interventions would have. Then the consumer re-engaged the marketplace once again in a more tepid fashion. At the end of the day/year, prices overall are up compared to a year earlier. Some segments, like to condo market, experienced strong year-over-year growth whereas the more expensive detached housing market experienced moderate price appreciation.
Average price climbed a bit as well, after last month's slight drop. You can now buy real estate in Toronto for $735,021 on average, which is 0.7 per cent more than last year. Condominiums experienced the biggest price climb, as is becoming a tradition in the current market. The average price for a condo is now on $503,968 mark, which is 14.4 per cent higher than last year.
The only segment dropping in price are detached homes, that might have finally outpriced the buyers with $989,870 for an average home. They dropped 2.5 per cent this month. Semis and townhouses are holding their pace with 6.7 and 0.7 per cent change respectively. December 2017 was indeed a strong month for Toronto real estate, despite the holiday season. There were 4,930 sales on record this month, which is only 7.1 per cent lower than last year. With drops and highs that ranged from -40.4 per cent in July, to +17.7 per cent in March, just before the new policy was implemented, this could be considered a great month for GTA REALTORS®. It's highly possible that the new mortgage rules that came into effect January 1st motivated some buyers to close sooner this December.
The biggest change from last year is the supply. There was 172.4 per cent more active listings this December than last year. New listings climbed by 51.9 per cent this December. The average time a listing was on this market was 27 days.
Our 2018 Predictions
You may ask, what's next for Toronto real estate and what can we expect as we start another year. Our team rounded their predictions for 2018 on the market. Let us know, if you agree with it or write your predictions.
Richard Silver, Sales Representative, SVP-Sales
My crystal ball shows another year where supply proves to be an issue. Government intervention on the demand side has not done much to curtail the Vancouver market and we expect the same for the Toronto market. Lack of product will encourage multiple offers on well-priced properties, however, overpricing should be avoided. As in the past, realistic sellers will sell and unrealistic sellers will keep listing.
Rizwan Malik, Sales Representative, B.Comm
I believe that 2018 will start off strong and finish strong with a little slowdown in the middle. We saw the market skyrocket early 2017 and many sellers will want to duplicate this in 2018. However, things will not be as out of control as they were last year. Even with eager buyers wanting to use their previously obtained mortgage commitment letters, I feel that supply will be up in the early part of this year. This is because many sellers have held off on listing until early 2018. The supply should satisfy the demand and therefore not drive the market to its limits as it did last year. The stress test comes into effect as of January 1st, however, the impact will not be felt until after March/April of 2018. We look forward to helping our buyers and sellers navigate this tricky market.
Sherille Layton, Sales Representative
We are looking forward to the year ahead as we always do. This year may not be the rollercoaster ride that was 2017 but there will be challenges along the way. First time buyers will be focusing on condos as that is what they can afford. And, they will look to our expertise to give them the best opportunity in well maintained and strong condo buildings. Residential properties may increase in price to due to low supply. It doesn’t mean sellers can be overconfident. There were plenty of properties that didn’t sell in the Fall due to over pricing and buyers are educated and cautious. Sellers have to prep their properties and have a strong pricing strategy in place. The stress tests will effect the market, but more likely those buyers with less equity and a tighter down payment.
Jim Burtnick, Broker, SVP-Sales
416 area will outperform the 905 suburb belt. Location, location, location" will count more than ever in 2018. First quarter of 2018 will be brisker than usual with pre-approved buyers (with at least 20 per cent downpayment) trying to capitalize on mortgage commitments received before the new stress test rules lower their borrowing power. Expect the second quarter to be slower than usual as buyers adjust to the new mortgage qualification rules. Expect the third and fourth quarters to gain in sales momentum and price appreciations as buyers get back into the market.