TORONTO REAL ESTATE NEWS | DECEMBER MARKET REPORT

By | January 8, 2019

We’ve got your Toronto real estate news for December. Sales and inventory down but prices up 2.1% overall. Condos lead 2018 price growth up 11.4% y-o-y.

Toronto Real Estate News | Hover or click over a community to see the local sale prices this month.

TORONTO CONDOS LEAD 2018 PRICE GROWTH UP 11.4% Y-O-Y

Making Toronto real estate news headlines this month are a few ‘scary’ stats. Sales may be down in the Toronto and GTA but so are listings. In 2018 total sales were down 16.1% from 2017. Leading to this decrease, however, is a decline in new listings entering the TREB MLS market. Total new listings were down 12.7% in 2018.

Toronto real estate community map

As a TREB MLS Realtor I noticed that fuelling these recent changes in the market were condominium apartment sales. Across the TREB market area (416 + 905), they are up 7.8% year-over-year. With overall sale prices down 4.3% y-o-y in the GTA.

Don’t be fooled by the BS floating around Toronto real estate ‘news’ channels this past week. They are lumping GTA stats with Toronto Proper stats and making a few people cr*p their pants in fear in the process. Although home sales may have slowed and the entire market as a whole is down, these stats lump all home types together. What we really care about is our local market. The 416 or “Toronto Proper” has actually been mostly isolated from these declines.

Toronto Real Estate News December Market Stats

Let’s break down the December Toronto real estate market stats for you.

When we lump all home types in the 416 together the average price is up 2.1% to $750,180 from $734,847 in 2018. Leading this trend is the least expensive Toronto real estate market type, condos. The Toronto condo market is up 11.4% followed by townhomes up 10% and semi-detached homes up 4% y-o-y.

The month of December continued to see slowing sales and decreasing inventory. Sales were down 22.5% with new listings down 31.5% compared to this time last year.

Average Home Prices for Toronto Proper in December 2018

LEADING THE 2018 TORONTO REAL ESTATE MARKET TRENDS

High Borrowing Costs

Canada’s new mortgage stress test coupled with rising interest rates moved many would-be buyers to the sidelines. The Toronto Star actually stated that interest rates have risen five times since July 2015 with two more hikes to be expected this year.

Lack of Inventory

After new listings spiked in 2017, we continued to see a shift in the Toronto real estate market. Inventory began to dry up and many would-be home buyers weren’t finding homes that met their needs.

Toronto Condo Market Leads 2018 Price Growth

Jason Mercer of TREB MLS stated, “Price growth was strongest for less expensive home types, as many home buyers sought more affordable home ownership options”

As the least expensive Toronto real estate markets, condos, semi-detached homes and townhomes realized price growth gains in 2018. Toronto condos are up 11.4%, with townhomes up 10% and semi-detached homes up 4% year-over-year in the 416 (Toronto Proper).

Toronto Housing Market For Detached Homes Down 4%

Slowing sales and a decrease in prices contributed to the tampering of the overall market growth in Toronto and the GTA. Detached homes represent the top end of the Toronto real estate market and the hardest home type hit.

NEW CONSTRUCTION & PRE-CONSTRUCTION CONDO PRICES UP 12%

The greatest price growth this year can be seen in the new construction condo market. New construction condos are up 12% year-over-year with their re-sale counterpart following behind at 7.5% year-over-year.

PRE-CONSTRUCTION CONDO CONSTRUCTION COSTS UP 10%

Inflation of Toronto’s pre-construction condo market was fuelled by the cost of construction and land, up 10% year-over-year. You can read more on pre-construction development costs in our blog “Why $1,000 psf is Toronto’s new Real Estate Norm“.

Low Vacancy, High Rental Prices

It’s hard to keep up with the increasing demand for rental inventory. Without the help of investors there’d be even fewer units added to alleviate the strain on the rental market. According to a study by Ryerson last year, more than half of the 105,000 condos being developed in the GTA were investor-owned.

Home Affordability Expected to Continue Decline in 2019

According to a report from the Royal Bank of Canada and reported by CBC, home affordability is expected to decline in most Canadian cities. The report states, “[In Toronto] the cost of owning a home will take up 79 per cent of the median household income of $71,631 by the fourth quarter of this year, up from nearly 76 percent in 2018.” Rising interest rates will also continue to make carrying a mortgage more expensive.

Growing Toronto Job Market Will Bring Long-Term Housing Shortage

Toronto is a World-Class city and job market. As such, it has seen consistent immigration with two million more immigrants expected by 2023. Toronto has more than twice the proportion of recent immigrants (8.4%) to Canada (3.5%).

First-Time Buyers Hardest Hit By Increasing Mortgage Rates

Interest rates have been raised five times since July 2015 with two more hikes to be expected this year. Hardest hit will be those on the lowest end of the Toronto housing market. Specifically first-time buyers looking to break into the Toronto real estate market. Adding to the difficulty of breaking into the market is Canada’s Stress Test.

As a Toronto real estate agent one of the major things I’ve noticed this year—and it really was to be expected—is that condos have become the default choice for first-time home buyers, especially those looking to live in the Downtown core. Those looking to jump into the Toronto real estate market face increased competition and rising prices. The most affordable option — studio condos—increased 16.8% y-o-y with one bedroom condos increasing 10%, two beds up 7.5% and three beds up 3.3%.