Canada's Condominium Magazine
Home sales across the country were down slightly in January compared to December, reports the Canadian Real Estate Association, dropping by 1.3 per cent. Actual sales, however, were up compared to a year ago in most markets, including the GTA. There was a significant decline in new listings, with 6.7 per cent fewer homes available for sale in January, particularly severe in Toronto and parts of BC, according to CREA. In Toronto, January listings were less than half of what they were a year ago, according to Toronto Real Estate Board statistics. The ratio of sales to new listings jumped to 67.7 per cent, up from 64 per cent in December and 60.2 per cent in November, indicating strong sellers’ market conditions.
While the year-over-year increase in the national average price for a home was negligible at 0.2 per cent, using CREA’s calculations, that is definitely not the case in Toronto, and especially in the luxury real estate market. The average Toronto home price grew 14.5 per cent over the year, bat at the top end prices rose much more, in some cases nearly doubling. Luxury condos in some buildings are selling for $1,200 per square foot; the city average for condos, according to the Red Pin is, between $500 and the low-to-mid $600s, depending on the area.
The shortage of homes available for sale has become more severe in some cities, particularly in and around Toronto and in parts of BC. Unless sales activity drops dramatically, the outlook for home prices remains strong in places that face a continuing supply shortage.
Toronto’s luxury home market is mainly supported by local buyers, according to an analyst with Knight Frank, the international real estate firm headquartered in London, with some foreign investors taking advantage of the weaker Canadian dollar. The estimated number of non-resident foreigners purchasing in Toronto is about 5 per cent, most of them using the home as a primary residence for family members.
Many are the parents of international students attending Toronto schools and universities. How many of them have purchased luxury homes is not clear from the data. The Toronto Real Estate Board reported that most foreign buyers paid less than $1 million for a home, a relatively inexpensive purchase compared to New York, London or Hong Kong. At today’s exchange rate, $1 million Canadian is US$760,000.
However, in 2016, 290 homes sold for more than $4 million in the GTA (209 of them in Toronto according to Sotheby’s International Realty Canada), an increase of 95 per cent year over year. Median prices in some neighbourhoods, such as the Bridle Path, increased by more than $1 million over the previous year. The high level of price growth is expected to continue through 2017, while overall home prices will continue to increase in double digits (10–16 per cent). Lack of inventory is the primary reason for the exceptionally strong price growth.
Said Gregory Klump, CREA’s chief economist, unless sales activity drops “dramatically” in places where supply is low, we can expect home prices to continue to rise fast.
A different take on the national homes market comes from the Teranet-National Bank Composite House Price Index. It shows a 0.5 per cent month-over-month increase nationally, and 0.8 per cent in Toronto. Considered annually, Toronto home prices were up 20.9 per cent by this measure.