Metaphorically speaking the Toronto residential resale market took a bit of breather in August. The numbers weren’t bad, but they were not as robust on a year-over-year comparison. Throughout 2014 the monthly positive variances compared to the same month last year have been strong, often approaching or exceeding double digits. This August the variance compared to August 2013 was only 2.8 percent, the lowest positive variance we have seen this year. In absolute numbers, August saw 7,600 residential resales. That compares to 7,391 a year ago.
It is impossible to draw market conclusions based on only one month’s data. It could be that August represented the last vacation month of this year, and both buyers and sellers took a holiday from the frenetic market that has been the norm in 2014. We await September’s results eagerly to determine if there has been any kind of shift in the Toronto area market place. It must not be forgotten that the tight availability of inventory, other than condominium apartments, has also played a major role in shaping Toronto’s resale market.
Notwithstanding a slowdown in sales, comparatively speaking, average prices remained strong. August’s average sale price came in at $546,303, 8.9 percent higher than the $501,677 achieved in 2013. On a year-to-date basis Toronto’s average sale price is now $562,504. In 2013 the average sale price for the year came in at $522,983. In basic terms, the average house in the Greater Toronto Area is about $40,000 more expensive this year than last.
As has been reported throughout this year the most expensive trading area remains Toronto’s central core. In August the average sale price for a detached house in central Toronto was $1,505,877. These properties also sold very quickly, averaging only 28 days on the market. On average they sold for 98 percent of their asking price.
On the whole the market was still very rapid. For the entire Greater Toronto Area all properties, regardless of type, sold in only 27 days. Last year it took 29 days. It must be remembered that by historical standards these statistics indicate that sales are taking place at the speed of light.
The most in-demand neighbourhoods continue to be found in Toronto’s eastern districts. Detached home sales in the eastern districts all took place in just 17 days, with sales in the popular Riverdale and Leslieville areas taking place in a remarkable 11 days. Semi-detached home sales were even faster. All sales of semi-detached homes occurred in an eye-popping 12 days, and for a sale price that was 103 percent of the list price.
As mentioned earlier, inventory has shaped Toronto’s recent resale market. Lack of product, particularly in sought-after neighbourhoods, has been the primary reason that prices have increased so dramatically. New inventory in August will not change that problem. In August 11,733 new properties were listed for sale in the greater Toronto area. This compares with 12,103 last year, a 3.1 percent decline. The result is that beginning in September there will be 17,882 properties available for buyers to purchase, almost 5 percent less than last year at this time. Currently the greater Toronto area has only 2.3 months of inventory. The City of Toronto has 2.4 months. A market place requires almost 4 months of inventory to be regarded as balanced.
Condominium apartment sales continue to account for most of the reported sales in the City of Toronto. There were 2,760 sales reported for the City of Toronto in August. Of those 2,760 sales, 1,344 were condominium apartments. There is little doubt that Toronto is becoming a City of impressive intensification, with more apartments on the way. During one week in August alone Toronto City Council approved the construction of 7,000 units. It is estimated that over the next few years there will be a further 70,000 condominium apartments in the City of Toronto. The majority of them have already been sold. Although not at the same pace as freehold, condominium apartment average sale prices continue to rise. In August the average sale price rose to $370,899, 4.1 percent higher than for the same period last year.
High end property sales continue to remain strong. In August 518 properties having a sale price in excess of $ 1 Million were reported sold, and 77 with a sale price that exceeded $ 2 Million. Interestingly 5 of those $ 2 Million plus sales were condominium apartments.
Going forward September should return to the robust pace of sales that we witnessed earlier in the year. Nothing has changed that would influence the market otherwise. Mortgage interest rates continue to remain historically low, inventory levels are also historically low, and aside from August’s breather, which may be overstating it, demand hasn’t appeared to abate. It will be interesting to see if inventory levels pick up in September and the following fall months. Higher inventory levels will moderate price increases while giving buyers some choice and time to decide – perhaps even more than 30 days.