Jenny & Justin’s Real Estate Update December 2016
Housing inventory falls to twenty year lows
It’s beginning to sound like a broken record, but such is the reality of the Toronto real estate market – and that is, the lack of inventory continues to be the key issue affecting the market. Inventory has consistently fallen since 2009, and in our opinion, has been the key reason for higher housing prices.
At the end of December, the number of active listings of all home types in the City of Toronto was 2,012 (down 54% from last year) and 873 in York Region (down 45%). For detached homes, the numbers are even more dramatic with only 488 active listings in the City of Toronto and 559 in York Region at the end of December. To put that in perspective, the City of Toronto and York Region have a combined population of about 4.0 million residents, and there are only 1,047 detached homes available for purchase. Here is some additional perspective, since 1996, the population of Toronto has grown by 421,000 residents or +18%, while inventory has fallen around 60%. Now, December is a challenging month to draw conclusions from due to holidays and weather, but again these are trends that have persisted for a long period. And while we anticipate inventory to increase as we head into the Spring, it seems likely the market will remain tight, which could further support higher prices.
2016 ends on a strong note
The average transaction price for all home types in Toronto was $710,307 in December (+13% YoY) and $935,316 in York Region (+20%). Detached home prices averaged $1.24 mln (+24%) in Toronto and $1.21 mln (+21%) in York Region. 2016 was the strongest year for housing prices in more than 20 years. Given continued low inventory, steady demand and low borrowing costs, we anticipate 2017 to be another solid year. Nevertheless, we also believe many buyers including first time buyers to focus their attention on the condominium market given more supply and better affordability.
Changes to Land Transfer Tax (LTT) for 2017
Effective January 1, 2017, several changes to the provincial LTT will be implemented. For residential properties, a new rate of 2.5% (up from 2.0%) will be applied on the portion of the purchase price that is above $2 million. The Ontario government has also doubled the maximum LTT rebate for first time home buyers from $2,000 to $4,000, and restricting the rebate to Canadian citizens and permanent residents. The City of Toronto is contemplating ‘harmonizing’ its Municipal LTT with that of the provincial rates, which could see a further increase in LTT for residents in the 416. This is currently a proposal and has not been implemented by City Council as of December.
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Jenny & Justin Wu
Real Estate Sales Representatives
RE/MAX Hallmark Realty Ltd.