Toronto Real Estate Blog

Single-detached housing values remain slightly off 2008 levels in 27% of Toronto Real Estate Board districts

Despite limited inventory levels in the Greater Toronto Area (GTA) in the latter half of the year, double-digit price appreciation failed to materialize in the single-detached housing category in 2009.

In fact, an in-depth analysis 63 districts within the Toronto Real Estate Board found that detached housing values in 27% of districts remained slightly off 2008 levels, while 57% reported price appreciation of less than 5% in 2009. Sixteen percent of districts recorded an increase in average price in excess of 5%. No double-digit gains were noted.

“There is simply no evidence of a housing bubble,” says Michael Polzler, Executive Vice President, RE/MAX Ontario-Atlantic Canada. “While sales were up considerably over one year ago – and supply was tight in many of the city’s hot pocket areas – the expected surge in average price did not occur. Buyers remained cautious in their pursuit of homeownership – with most unwilling to overpay for the privilege. ”

While one quarter of all Toronto Real Estate Board districts saw prices in the detached housing category soften in 2009, just over half declined by less than 2%. Those that saw prices fall by more than 2% were primarily upper-end neighbourhoods – the vast majority located in the central core – which were slower to rebound once the market regained momentum. By year-end, however, sales in all of these areas posted double-digit growth – a fact that clearly indicates a greater number of transactions at the lower end of the price spectrum. Inventory may have also played a role as sellers held off listing their luxury properties until market conditions improved.

Leading the GTA in terms of price appreciation was South Pickering (E12) where the average has risen 9.4% to $358,493; Malvern, Hillside, Rouge (E11) takes second place with a 7.3% upswing to $368,095; North Pickering (E13) was ranked third with values climbing 7.2% to $396,973; fourth spot goes to Port Credit (W12) in Mississauga where values have climbed seven% to $614,144; and rounding out the top five – the lone downtown Toronto district – was Riverdale, Leslieville (E01) where prices escalated 6.7% to $522,017.

Ballantrae, Cedar Valley (N13) ranked sixth with a reported 6.4% increase to $662,268. In seventh place is Richmond Hill – North End (N05) with a 6.3% increase in average price to $574,642. The Applewood, Rathwood neigbhourhoods (W14) in Mississauga ranked eighth in terms of price appreciation, rising 6.1% to $505,994, while Markham (N10) claimed ninth spot with a 5.3% escalation in detached housing values, bringing the average to $510,268. Bathurst Manor, Armour Heights (C06) in the city’s north end secured tenth place with a 5.1% upswing in average price to $597,025.

Top Toronto Neighbourhoods

The East clearly dominated the top five and affordability factored in heavily, with single-detached homes in both Pickering districts and Malvern, Hillside, Rouge, priced under $400,000. Young families – most buying their first home – were attracted to communities like Riverdale and up-and-coming Leslieville, while move-up buyers looked to Port Credit, which has steadily increased in popularity in recent years.

“First-time buyers were a driving force throughout much of the year, but their role was most noticeable in early 2009,” says Polzler. “Almost one in every two homes sold was priced under $400,000 in the first quarter of the year. An entirely different picture emerged in the final quarter when just one-third of homes moved under the $400,000 price point.”

As the move-up segment swelled, so too did demand for more upscale properties across the board. Yet, despite the upswing, average price registered only a small percentage increase. In the central core, for example, where the average price ranges from $572,529 in Don Mills to as high as $1,717,190 in Rosedale, overall values rose 1% to $919,838, compared to 2008. Unit sales in C-district jumped 31% to close to 4,000 units.

The number of homes sold in the city’s north end saw the greatest percentage increase at 32% to 8,843 units. Average price in North district, which ranges from $398,864 in Newmarket to $700,499 in King City, rose 2% overall to $555,616. Housing sales climbed in the west, where values range from $298,136 in Brampton to $790,060 in the Kingsway, by close to 19% to 12,453 units. West district’s average price rose a nominal 1.5% to $467,227. The increase in sales was more moderate in the East End (including Scarborough and Pickering, Ajax), where values range from $325,393 in Bendale, Woburn to $691,128 in the Beach. The number of detached homes sold increased 15% year over year to 6,690. Average price in East Toronto rose 2.6% overall to $400,813.

“After a dismal start, the stats confirm that 2009 returned to the healthy, upward trajectory that we have followed for much of the last decade,” says Polzler. “We see detached homes continuing on that course in 2010, with moderate gains expected. The detached housing category continues to be a solid gauge of the market’s overall performance, accounting for approximately half of the activity in GTA.”

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Contact the Jeffrey Team for more information  -  416-388-1960

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Tony Wong – Toronto Star

Home price appreciation will slow in the Toronto market this year as a looming supply of new homes is completed, giving consumers more choice and helping to mitigate future gains, a bank study said.

“The stock of new construction is rising and that will have the effect of slowing any price increases,” National Bank of Canada senior economist Marc Pinsonneault said Tuesday.

Toronto prices were up 4% at the end of 2009, with sales rising 17% year over year, as homes sold in an average of 23 days, the shortest interval in recent history.

However, a record number of completions this year will help bring more listings to the market. Move-up buyers, meanwhile, are expected to put more homes up for sale, alleviating the supply crunch.

Given those factors, the bank echoes other analysts who say price appreciation likely will be much slower, or flat line this year.

“Certain factors lead us to believe the price growth will slow soon,” said Pinsonneault in the bank report on real estate.

“The number of homes on the market has been mounting since November and could continue to do so. Recent price increases and the current tight conditions on the resale market have stimulated housing starts … Once these dwellings are completed and enter the market, they will reduce the scarcity of available homes.”

Shaun Hildebrand, senior market analyst for Canada Mortgage and Housing Corp. estimates 36,000 condominiums are under construction for Toronto alone. Another 7,000 single-family homes were being built at the end of 2009.

“The big question is how many of them were purchased by investors who are going to put them back on the resale market by flipping them,” said Hildebrand.

New home sales in the Greater Toronto Area were on a tear in the second half of 2009. In December alone, sales rose fivefold from a year earlier, when the recession took hold. Overall, 2009 sales were 28% higher than in 2008.

In the condo sector, investors are back in the market buying smaller units, Hildebrand said.

Buildings sold in 2006 and 2007 are finally being completed this year due to a construction backlog. “It was difficult to get labour, then many of the buildings are more complex and taller, and then you had a credit crunch,” Hildebrand said.

CMHC said the highrise sector will be more affected by the new supply and the lowrise sector by increased resale listings.

With homeowners staying put due to economic uncertainties, many fixed “their homes up under the renovation tax credit.

“Now they’re likely to be putting their homes on the market this year.”

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Contact the Jeffrey Team for more information  -  416-388-1960

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Christopher Hume – Toronto Star

Maybe it isn’t surprising Toronto has such problems dealing with its own success. The City of Neighbourhoods is full of people who stand on guard against change in all its forms. Often their vigilance is justified, but sometimes it’s simply obstructionist.

In either case, it means that even when things happen, they do so slowly and painfully.

But when an area such as Yonge and Eglinton has become as cosmopolitan as it is, you know that change can be a good thing, something we control but also encourage. Specifically, we’re talking about Yonge south of Eglinton, which wasn’t always what it is today.

The advent of the two residential towers on the east side of Yonge several years ago helped fill in a gap that in effect severed the street. That didn’t quell the anger of local residents who fought the project every step of the way.

At the same time, however, the old two- and three-storey buildings that line Yonge, Mount Pleasant and Bayview have been put to new uses over and over again.

Indeed, each generation remakes these modest but wonderfully flexible structures in its own image.

Condo Critic – Chaplin Place, 20 Glebe Road West

Tucked away on a tiny dead-end street halfway between Eglinton and Davisville Aves., this unusual red-brick condo takes full advantage of a site that many might consider problematic. Located alongside the TTC subway line, which was cut through the neighbourhood more than half a century ago, it would be a perfect place for anyone wanting to know if the trains are running on time.

Though far from beautiful, the five-storey building feels entirely appropriate in its context and thoroughly thought through. The boxiness seems right in such an urban setting. The large windows and slanted sunroofs on top make it clear this is residential, despite the presence of several businesses at street level. The entrance, which faces south onto Glebe, does not call attention to itself but is not hard to find. To the west, the units overlook the tracks, which may not sound desirable but this stretch of the subway is one of the most attractive.

Architecturally, the most interesting aspect of the building lies in the almost monumental quality of the masonry exteriors. With their strong vertical and horizontal lines, they bring a nice sense of simplicity and character to the place. Aesthetically, it looks like an early modernist variation on a vaguely Arts and Crafts theme.

The randomly arranged concrete planters out front don’t add much to things. Why we can’t manage to put trees into the ground where they belong is hard to understand. If North Toronto is to remain as leafy as we have grown to expect, it’s time to start planting.

GRADE: B+

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Contact the Jeffrey Team for more information  -  416-388-1960

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Many people contact us about buying a condo that they can rent out. The problem is, a lot of them want the rent to cover the entire cost of owning the condo. Some even want profits on top of that! While it may be doable, it is just not something that is easy to find. If it were, I would own 20 of them and be making enough money every month that I did not have to work. Yet, here I sit typing this post…

It is not so easy to find a condo that rents for enough to cover all expenses these days. Too many people have bought condos to rent out, pushing rents down. What I tell people is that if you can get enough so that you are only paying out a couple of hundred dollars a month, then you have someone paying your mortgage and helping with the condo fees. If your total costs are $1,738 per month and you can get $1,500 in rent, then that is not so bad at all.

All that being said, there are a lot of variables. Depending on what you put down, your mortgage rate, condo fees, what utilities are included and more – you are going to have a range of options. What I suggest to start is to find a condo that has a tenant already. Then you do not have to worry about getting someone in right away, you have cash flow right from the start. And you also know what the rent is, so you can judge the costs accordingly.

Now, you will have to have  a big think about  price and area. Area is easier, in that you want to make sure that your unit is in an area where people want to live. Being close to universities is a good idea, though you have to put up with student renters. Arty areas are good, because they are also in demand and there is very little there. Stay away from areas such as CityPlace, as you will always have 57 competitors with condos to rent.

You will want to get something as large as you can afford, because 90% of rental condos are little one-bedroom boxes. Also aim for being unique, buy something that is hopefully not a little white box in the sky – because that is what almost everyone else has. Think loft, boutique building, view, parking, interesting location, etc.

I highly recommend buying in the east end, as that is where we are going to see a big price jump in the next 5-10 years. You have Regent Park being torn down and replaced, about 1/8th complete now. The West Donlands Project is going to transform 15 acres at the foot of Bayview. Lastly, the Pan Am games will be centered around the east end, creating a nice trifecta of property value influencing events.

If you are thinking of buying an investment condo, give us a call.

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Contact the Jeffrey Team for more information  -  416-388-1960

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Year will see listings rise, price growth moderate

The Toronto Real Estate Board President’s Column as it appears in the Toronto Star

We have just crossed the threshold into 2010 and I think it is important to look back on the events that impacted the Toronto real estate market in 2009 and also consider what the future holds.

In the latest month end report, the Toronto Real Estate Board released MLS figures for December resale home transactions in the GTA. There were 5,541 total transactions, with an average price of $411,931.

The December results capped off what turned out to be a very impressive year. Sales increased 17% annually to 87,308 – the second highest level of sales under the current Toronto Real Estate boundaries (the record of 93,193 was reached in 2007). Average price for the year climbed to $395,460 – a 4% increase over 2008. However, simply looking at these numbers on their own masks the interesting ride we took over the last year.

In the first quarter of 2009, Canada was in a recession and existing home sales and prices suffered. In fact, sales had been dropping throughout 2008. According to Jason Mercer, the Toronto Real Estate Board’s Senior Manager of Market Analysis, the balance of the housing downturn in the GTA actually took place in 2008:

“The housing market was and is a leading indicator of changing economic conditions. As we moved through 2008, Canadian consumers were hearing more and more bad news regarding the deteriorating state of the US economy and the problems this would pose for Canada. Households, unsure of what the future would hold in terms of employment and income, put their home purchasing plans on hold well in advance of reported GDP and employment declines. Essentially, downward trending home sales reflected eroding consumer confidence,” said Mercer.

With this back-drop, many people were surprised to see a strong rebound in Toronto real estate market demand commence in the late spring of 2009 when unemployment was still rising. Mercer further suggests that the quick recovery made a lot of sense and, in fact, was a key driver to broader economic recovery:

“The Bank of Canada reduced interest rates to record lows in response to the economic downturn. This monetary stimulus had the desired effect. Households that were confident in their employment situation moved quickly to take advantage of the affordable housing market in the GTA. The spin-off consumer spending on housing-related items like furniture, home improvement products and renovation services certainly helped economic recovery,” continued Mercer.

With broader economic recovery seemingly in place, what will the future hold for Toronto real estate in 2010? I asked Jason Mercer to comment both on the short-term and the long-term prospects in the Toronto area. Here is what he had to say:

“The big story in 2010 will be listings. Homes available for sale were in short supply during much of 2009. As home owners react to strong sales and price increases seen in 2009, listings will increase over the next year. With more choice in the market, annual average price growth should moderate into the single digits,” said Mercer.

“Long-term prospects remain positive. Sustained demand for ownership housing is based on population growth, which in Canada comes from immigration. The GTA remains Canada’s single greatest beneficiary of immigration. With Toronto’s ethnic, cultural and labour market diversity, this should continue. Many newcomers will eventually find their way into the home ownership market, helping sustain long-term growth in sales and prices,” continued Mercer.

I know we will all be watching the economic situation closely in the coming year, including changes in the Toronto real estate market. I look forward to discussing housing market trends with you throughout 2010.

Tom Lebour is President of the Toronto Real Estate Board, a professional association that represents 28,000 Realtors in the Greater Toronto Area.

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Contact the Jeffrey Team for more information  -  416-388-1960

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