Canada's Condominium Magazine
While some economists are predicting a “glacial” market for the next few years in Toronto, this frostiness isn’t apparent in market indicators — and a significant number of experts disagree. With the average price for detached homes at $968,494 (as of August, TREB numbers), condominiums nudged past half-a-million ($507,841 for August 2017), urged upwards by buyer-preferences for a more vertical lifestyle. [See Condo.ca’s August market report>>] The bottom line for many — Toronto is still desirable, and condominiums are increasingly the affordable urban choice.
Toronto, as a financial and economic centre, is just too desirable a location to stay down for long. With the economy strong, and with Toronto among the world’s most “livable cities” — according to many surveys, such as the Global Liveability Report (Toronto placed 4th worldwide) — that demand is not decreasing. The desire to live in Toronto is what created the heated market in the first place.
The market in September shows signs of activity. The new condo market remains active, and there has been a substantial shift in interest to condominiums as a preference over detached homes in the resale markets. A TREB-commissioned survey showed “That the number of people intending to buy remained high.” A new survey from car2go indicated that, in Toronto, 66% of consumers intended to buy within a year — including both first-time buyers and people moving up or down from an existing home.
A more balanced market
August was clearly a “wait and see” month as buyers — who are very much still in the market — tried to make sense of the new market reality. Sales had dropped precipitously after Ontario introduced new rules designed to cool the market. Yet prices still inched upwards as supply remained relatively low. Now, in the resale market, realtors and buyers have a good sense of where the market is going, what the new price expectations from sellers are. Off the table are multiple offers and out-of-control bidding. Now, the market is a little more balanced, favouring neither the seller nor the buyer. The buyers who seriously need or want to buy this year are moving back into deals-mode.
Inventory: resale inventory at 2.5 months
The National Bank of Canada economist Mar Pinsonneault indicated that the ratio of listings to sales in Toronto is currently 2.5 months (as of August). Therefore, it theoretically takes 2.5 months to sell all houses. This is an improvement from the low of 0.66 in February of this year.
This average, according to Mr. Pinsonneault was last seen in 2012, and indicates a “low risk of significant further price correction.” Other analysts concur that no further correction in pricing is likely. 
Buyers feel that in the market, too. With a sense that the prices have hit their new level, the offers are starting to come in once more. Earlier in this year, in the hot spring market, people were motivated by the fear of “missing out” on the Toronto market — again, a reflection of the desirability of Toronto as a livable city. After Ontario’s Fair Housing rules kicked in, buyers hit pause — suddenly fearful of paying too much. Some buyers with deals backed out, despite penalties. The volatility of the first half of 2017 has begun to level off into a more balanced market, with buyers returning — this time, with more control over the deals. Despite an increase in interest rates, the more level playing field is returning the market to normal seasonal levels.
Move up buyers: sell first, buy later
One change in the market that is becoming more defined is the move-up buyer. In the heated markets of 2016 and early 2017, move-up buyers felt compelled to buy-sell at the same time. More or more move-up buyers are selling first — to make sure of their return, before investing in a new property.
Why is Toronto so desirable?
The main reason analysts aren’t expecting a long-term chill in markets is the desirability of Toronto. For Canadians, Toronto is one of the most important economic centres, with high employment (or prospects of employment) and a very compelling livability standard. Toronto ranked 97.2 out of 100 on the Global Liveability Report 2017. Vancouver and Calgary also made this top ten list. Some of the key reasons cited are stability (political), healthcare, culture and environment, education and infrastructure. While local Torontonians often complain about all of these things, in the context of world cities, Toronto is considered better than just world-class.
Specifically, out of 100, Toronto scored:
- 100 for Stability (political and economic)
- 100 for Healthcare
- 97.2 for Culture and Environment
- 100 for Education
- 89.3 for Infrastructure (both Calgary and Vancouver ranked higher).
Although new rules from Ontario discourage foreign investors, Toronto is still a highly desirable target city for immigrants for all of these reasons.
Toronto “relatively” well-priced as a world city
Compared to other desirable cities around the world — New York, San Franciso, L.A., London, Hong Kong — Toronto is very well priced. That doesn’t necessarily mean affordable. Affordability is a factor of an individuals situation. But as a world-class city, Toronto is lower on the price scale. As we reported previously [“Is Toronto Unaffordable?”>>], Toronto is among the lowest per square meter as compared to Hong Kong, Paris London, New York and Vancouver.
As of June 2017:
- Toronto $7216.28
- Chicago (Toronto’s sister city U.S.) $4213.23
- Vancouver $10,514.48
- New York NY $15,774.27
- London UK $26,6844.39
- Paris France $14,154.00
- Hong Kong $33,138.14
 Reported by the CBC. “Toronto home sales soften in August, but fall could see market warm up.”
 “Toronto prices seen stabilizing as key housing ratio balances.” — Globe