December 2014Toronto Real Estate Market Report December 2014

The Toronto residential resale market ended 2014 in strong fashion, recording 4,448 sales, an increase of 9.6 percent compared to the 4,058 sales recorded in December of last year. December’s sales bring the year-end total for residential resales to 92,867 properties sold, the second best year ever recorded for the greater Toronto area, and only 326 sales short of the 2007 record of 93,193. If there had been more inventory in December and throughout the year, the record would easily have been shattered. Demand remained strong, even in December, but the properties available for buyers to purchase were insufficient to satisfy it, particularly at price points below $ 1 Million. For example, in December only 128 semi-detached properties were reported sold in the City of Toronto. 12 of Toronto’s 36 trading districts recorded no sales, because there simply were no semi-detached properties on the market available to buy.

The demand-inventory problem is highlighted by growing average sale prices in December, and again throughout 2014. In December the average sale price for all properties sold came in at $556,602, 7 percent higher than the average sale price of $520,189 achieved last year. On a year-to-date basis the average sale price for 2014 came in at $566,726, an all-time high, 8.4 percent higher than last year’s average sale price of $522,958. These numbers are even more dramatic when it is remembered that more than 30 percent of the sales that contributed to these prices were condominium apartment sales that averaged only $362,785 in December.

Looking back over the last decade the average sale price in the greater Toronto area has increased by an eye-popping 80 percent. In 2004 a buyer in Toronto could purchase a home for a mere $315,231. That same house today will cost $566,726. What has enabled buyers to continue to purchase properties that have increased so rapidly in price over this period of time has been mortgage interest rates. In 2004 five year rates were 4.25 percent. They rose to a high mark of almost 6 percent in late 2007, and since then have trended downward and remained stable since 2012 at under 3 percent. Since wage increases have only averaged 2 to 3 percent annually since 2004, this analysis of mortgage interest rates over time vividly illustrate how important low interest rates have been to the Toronto residential resale market over the last few years.

High end property sales were strong for December. Usually that end of the market goes quiet in December. This December 332 properties having a sale price of $ 1 Million or more were reported sold. Last year only 216 properties in this price point were reported sold, an increase of almost 54 percent. As has been the case all year, the most expensive Toronto properties are located in the City’s central core. In Toronto’s central districts the average sale price for a detached property came in at $1,558,134. Semi-detached properties sold for $800,968.

The pace of sales in December slowed. For the first time in many months the average days on the market for properties sold exceed 30 days. In December (on average) all listed properties sold in 32 days, one day less than the 33 days it took in December 2013. However, depending on property type and location, some properties sold much more rapidly. For example, detached homes in Toronto’s eastern districts sold in only 19 days. Semi-detached properties, if they were available for sale, on average sold in only 21 days throughout the greater Toronto area, and a breathtaking 14 days in Toronto’s eastern districts.

In 2014 the spread in average sale prices between Toronto’s eastern and western trading districts narrowed once again. The average sale price in Toronto’s western districts came in at $527,627, only $23,000 higher than the average sale price of $504,525 achieved in the eastern trading districts. Toronto’s central districts remain the most expensive, with an average sale price of $722,489, with almost 50 percent of all sales being the lower priced condominium apartments.

Inventory levels were a concern throughout 2014, and will continue to be in the early part of 2015. In December 4,448 new listings came to market, although that is more than the 4,062 that became available in 2013, at the beginning of 2015 there were only 10,230 properties for sale, 10.4 percent less than were available at the beginning of 2014. With sales taking place at their current pace, it would take an avalanche of new listings to alter the current inventory-demand balance. At year end there were only 2.4 months of available inventory in the City of Toronto, and only 2.2 months of inventory in the greater Toronto area.

The big story for 2014 was condominium apartment sales. In 2014 the myth that developers had overbuilt condominium apartments was finally put to rest. Condominium apartments are not only an acceptable way of life in Toronto, but now represent the largest housing sector by type. For example, in December condominium apartment sales accounted for 30 percent of all reported sales in the greater Toronto area, and 52 percent of all sales in the City of Toronto. Sales of condominium apartments in the City of Toronto increased by 16.1 percent, with a corresponding increase in average sale prices of 5.4 percent. Clearly condominium apartments are not only Toronto’s most affordable housing type, but buyers are not only choosing condominium apartments because of affordability, but also because of life style.

Chestnut Park Real Estate Limited, Brokerage |
prepared by: Chris Kapches, LLB, President and CEO, Broker