October was quite a busy month in Toronto real estate. GTA Realtors reported 7,492 sales through TREB’s MLS® System in October 2018, which makes for a 6 per cent increase in year-over-year comparison with October 2017.
Detached homes sales were up by 7.1 per cent, semi-detached by 12.7 per cent and townhouses by 0.8 per cent. Condo sales were up by 5.5 per cent.
The average price is also on the rise. In October 2018, the average price for a home across the GTA was $807,340, which is 3.5 per cent more than last year. Detached homes increased by 1 per cent with the average price of $1,019,416, semi-detached by 6.6 per cent and sold for $816,657. Townhouses sold for $655,777 on average, which is 4.1 per cent more than last year. The average price of condos was $562,523, which is a 7.5 per cent increase compared to the same period in 2017.
With Halloween just around corner, the spookiest part of the real estate market in October was the lack of inventory that is very persistent across all segments. In general, Toronto is currently a strong seller's market. New listings were down by 2.7 per cent and active listings were hanging by the thread with a 0.4 per cent increase that is not even worth mentioning. The average number of days the property stayed on the market was 24, which is only one day more than in October 2017. These changes and rising sales with dropping listings make for tighter market conditions for many buyers.
So what can be done to balance the scales of supply and demand on the current market? There are a few things that need to be addressed; First, there's the lack of supply of medium-density developments, that could serve young families and the missing middle is a persistent problem that could be fixed. Second, many Baby Boomers are in no rush to downsize or right-size to suit their new lifestyle and listing their family homes with enough space for younger and bigger families in need of the space. Right-sizing could solve many issues that Toronto has with the supply problem, especially when it comes to detached homes and semis.
But alas, the supply problem is all-persistent and will not be solved overnight. The best strategy for buyers on this market is finding a great real estate agent to help them find the best home to suit their needs.
Richard Silver, Sales Representative, SVP-Sales
Slowly but surely we are moving out of the slower market and into a more brisk year than last year. Again and again, the issue is more about lack of product and having nowhere to go if the intention is to sell before buying.
We are also noticing a social trend that may be affecting the Real Estate market. Zoomers or Baby Boomers are healthier, living longer, staying in their jobs longer and are not prepared to right-size, often until it is almost mandatory.
There is a large transfer of wealth to their Millennial children but less product for those children to choose from causing a shortage of listings that are affecting the market. Lack of product means slower growth but is also a sign of rising prices in the next year as well as a search for other housing options: Condos and rentals. Recently we had a rental listing and had five offers on it. That was a first on a rental listing, but a sign of the change in the market.
This year will be interesting to monitor with rate increases, US Elections and trade tensions around the World. Never a dull moment.
Jim Burtnick, Broker, SVP-Sales
The real estate market has been and continues to gain momentum as we move throughout 2018 (this is in line with exactly what TREB predicted at the start of the year). That is, buyers have adjusted to the new reality of "stress-test" mortgage requirements and are now simply viewing this as the "new normal" (akin to when Toronto implemented a new land transfer tax so many years ago). Buyers initially stood on the "sidelines" waiting to see if the prices would fall because of these changes. Once they were satisfied that the "sky was not falling", buyers have started coming back into the marketplace in greater numbers. Hence why October 2018 sales transactions are greater than October 2017.
Where the real issue lies is in lack of supply of new housing options. Unfortunately, this is not going to change anytime soon. When I was recently at a BILD (Building Industry and Land Development Association) event regarding the forecast for the real estate marketplace in 2019, a statistic was shared that I think sums up why we have (and will continue to have) a dire supply shortage. That is this; on average, it takes 15 years for acquisition of land to completion of new residential construction! There is WAY too much bureaucracy impeding development.
I was also recently at the TREB Annual General Meeting where the featured guest speaker, Benjamin Tal (Deputy Chief Economist at CIBC World Markets). Amongst many interesting points he highlighted effecting our economy and its relevance to the real estate market, he summed up his presentation with this statement:
If you think Toronto real estate is expensive now, just wait 10 years to see how much more expensive it will be!
My advice and bet is this: Buy Toronto real estate now and hang on to it. Not only will it be worth much more in the future, but it will be even less affordable to enter the market in the future.
Rizwan Malik, Sales Representative, SVP-Sales
Another month and another set of facts and figures but what continues to hold true is the need for more listings. Typically, the market starts to slowdown towards November and December, however, I was just in a multiple offer situation yesterday with 5 other competing bids. This only shows one thing, the supply is not in line with the amount of demand that still exists. There are countless youngsters who are looking to enter the market for the first time because the realize that they will continue to get priced-out the longer they wait. With the market going the way that it is and seller expectations as high as they are, many buyers are forced to face the sad reality that overpaying for a property might just be the only way to get their foot in the door. As I’ve said before, contact us and let us help you navigate this tricky market, no one has a crystal ball but we definitely have decades of experience on our side!