Jenny & Justin’s Real Estate Update February 2017
GTA housing market continues to steamroll ahead
If you are feeling déja vu reading our monthly updates, we can assure you, we feel the same writing them! The story has indeed been consistent: that is the markets remain red hot driven by a lack of inventory and steady/strong demand caused by net immigration and low borrowing rates. Still, while we remain upbeat in the long term about the Toronto real estate market, we can’t help but feel that prices are getting ahead of themselves after another robust month for price growth. Interestingly enough, the same could be said of other asset classes – look at the stock markets (which continue to reach new highs) – as well as other real estate markets – look at what’s happening in Shanghai, Beijing, Sydney, Auckland, NYC, San Francisco,
Hong Kong and even Seattle. So Toronto is not alone in experiencing record price growth. But does this mean a correction is forthcoming imminently in the Toronto market? Our short answer is no, given the severe lack of supply and continued demand. However, it’s hard to believe this pace of price growth is sustainable. Affordability is a big issue of course with the fear that many buyers are overreaching beyond their means and taking on too much debt. While this may not be a concern right now, it would be if an economic slowdown were to occur (resulting in job losses, lower home prices), or when interest rates eventually rise and mortgage refinancing is needed.
Prices hit record levels
The average transaction price in the City of Toronto rose to $859k or an increase of 19% from last year, while detached homes rose 30% to an average $1.574 million – both were new record highs. In York region, average transaction prices for all home types including condos was $1.138 million (up 33%), while detached homes averaged $1.466 million, an increase of 37%.
Condo activity is accelerating
With detached housing prices in Toronto getting beyond reach, many buyers have turned their attention towards condominium apartments and townhomes. However, these buyers are also competing against investors seeking rental income and cash flows. As a result, condo inventory is down significantly, and prices have been accelerating. In February, active listings of condominium apartments in Toronto were down 62% to 1,301 units from 3,432 last year. Multiple offer scenarios have become commonplace in the condo market. Average condo prices in Toronto rose 18.2% in February from last year. While this lagged detached home price growth, it was the biggest percentage increase in nearly seven years. We anticipate the condo market to remain highly active through 2017.
To receive a full copy of our detailed analysis of the February data, please message us or comment below. Or if you are planning on buying or selling and would like to discuss confidentially, please reach us at [email protected].
Jenny & Justin Wu
RE/MAX Hallmark Realty Ltd.