December 7, 2017 | Market Update

Seasonality – Or Lack Thereof – In 2017

In previous years, we’ve seen a rock-solid trend: Sales activity drops from October to November. With Black Friday, cold weather, and people gearing up for the holidays, buying and selling homes becomes a lower priority mid-November and beyond. We’ve come to expect that.

This year, though, that’s changed. November sales activity increased from October to November, with a reported 7,374 transactions last month alone. It’s just another example of how 2017 has been a fascinating, trend-bucking year in real estate.

 

A Changed Market Climate 

Still, November 2017 was slower than November 2016, which might partially explain the uptick from October. Torontonians are gaining more confidence in the market, and homebuyers are coming out of the woodwork to score better prices than they might have 6 months ago.

It’s not just confidence, though. New mortgage lending guidelines, set to take effect in the new year, could be triggering increased activity in last-chance efforts to buy homes by those who might not be so sure about their prospects come January.

All in all, this climate of increased confidence and a deadline for lending means we’re looking at a uniquely busy December.

 

Condos Are Still King

For years, the low-supply detached market has meant house prices skyrocketed with demand. Post Fair Housing Plan, we’ve seen prices settle to new normals. The average Toronto detached house price is sitting at just under $1.3-million, which is a 5% decrease in price over last year. That isn’t too much – and definitely not the rock-bottom price many were expecting.

Condos, on the other hand, are going for an average of about $555K, up 17% over last year. Even condo townhouse prices are up to an average of $760K, with an increase in price of about 12% over 2016’s average.

 

The Investor Influence 

Condos’ upwardly-mobile price increase might be partially due to the ultra-tight rental market. Rental units are money-making assets right now, with investor-owned condos renting for $2,000 a month. Average rental prices have climbed above $1,500 for every other type of unit in the city, including basements and multi-bedroom units.

In conjunction with Toronto’s historically-low vacancy rates, it means that condos are the top-ROI-generating investment throughout the GTA for any type of investor.

Rental vacancies are at their lowest in 16 years according to a recent Toronto Star report. The overall GTA vacancy rate is at 1.1%, with the Toronto Metropolitan area slightly lower at 1%. That means at any given time, only 1 unit out of 100 is unoccupied.

Anecdotally, this historic low means months-long apartment searches, high competition for units, and price increases for renters throughout the city. For investors and condo-owners though, it means their resale value is increasing faster than any other home type in the city, especially for new condo owners.

 

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