Last week saw a flood of new listings come onto the market, with condo re-sale listings alone increasing 90%. Historically, the fall market shows an influx of new listings and renewed real estate activity, but last week’s sales numbers were down 30%. Labour Day Monday may account for the slower start, next week will tell. The big question is whether Toronto’s real estate market slowdown has come to an end?

 

Toronto condo prices are back up but sales are slow

 

In June, we discussed the trends of real estate market slowdowns and the expectation that ours wouldn’t last long. And it looks like we may have been right, at least when it comes to condo prices. The price drops that we saw in April, May, and June, which amounted to a -5.67% decrease on average across Toronto, have almost returned to April levels. The sales numbers, however, are still down.

The rules of the game have changed. As of September 1, 2017, landlords must follow stricter rules when it comes to evicting a tenant, or else face up to $25,000 in fines. These changes are part of the Ontario government’s new Fair Housing Plan, which included expanded rent control on all buildings and a standard lease proposal. The new rules for landlords and tenants are about evictions, making it riskier for landlords and safer for tenants.

 

Here are the new rules for landlords:

 

It looks like as we say goodbye to August, we also say goodbye to Toronto’s chief city planner, Jennifer Keesmaat. As of September 29, Keesmaat will be stepping down from her role at City Hall to pursue other interests and spend time with her family.

Keesmaat impressed us a lot at the Toronto of the Future architectural showcase back in June. She spoke of a greener, denser, and more efficient future for Toronto’s urban planning, and we hope her ideas remain a driving force at City Hall even after she’s gone. Her vision for a healthier, more liveable city is one shared by many people, and it’s something we all need to keep talking about.

“What’s going on with the rental market? There is nothing to rent. Everything is either leased or has 3 offers . . . or super expensive!!!”   “Went in with $150 over asking with extra months up front. Married couple. What more do you want? They had 10 offers on the place.”   “The listing agent informed me that we were the highest offer but the landlord decided to go with another one.” 

 

That’s a snippet of what we’ve been hearing lately. In short, the Toronto rental market is insane. The Toronto Star recently ran a story about average rent in Toronto passing the $2,000/month mark, an 11% increase year-over-year. But the average rent of a condo in Toronto has been above $2,000/month since July 2016, so it’s not really the price that’s the problem. It’s that supply is being pinched and demand is rising.

The Toronto real-estate market has changed rapidly over the last three years. In August of 2014, the average PSF for Toronto condos was $428, or $299,600 for a 700sqft condo. Today, the average Toronto condo PSF is up roughly 50% to $656.*

Month by month, the Toronto condo market has been absorbing the displaced demand for resale freehold houses, pushing buyers from one marketplace to the next. As affordability shifts, have pre-construction opportunities become the new entry-point into Toronto real estate?

Early last week, the media made the call that Toronto has become a buyers’ market. The monthly sales-to-new listings ratio for real estate in June fell below 40%, which basically means buyers have more choice right now among a larger supply pool. But the condo market might still be telling a different story. What we want to know is this:

 

If Toronto is now a buyers’ market, where are all the buyers?

 

According to the Toronto Real Estate Board’s analysis of the real estate market en masse, many would-be buyers are staying on the sidelines right now watching for further decreases in month-over-month prices. Sellers, on the other hand, seem to be listing their homes with the belief that price growth in Toronto real estate has reached its peak. But TREB’s analysis is largely invested with Toronto’s freehold housing market, skewing the picture if you want to look only at condos for sale in Toronto.