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What to Expect this Fall from Toronto Condo Real Estate

What to Expect this Fall from Toronto Condo Real Estate

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.

Toronto condo market index of condo sales and condo prices

Toronto condo market index of condo sales and condo prices Market Index, showing total sales for August 2017.

Current sales figures for August look like they’ve been pulled from August 2014, which may indicate a return to normalcy after several years of craziness. We can only hope.

Toronto Condo Market Index for Condo Sales and Average Price Sold

Toronto Condo Market Index for Condo Sales and Average Price Sold Market Index, showing total sales for August 2014.

There are currently, at the time of writing this, 2,624 active condo listings on the MLS. That’s good news for buyers because they have more options. Despite this increase in listings, however, prices are staying level if not rising from June and July trends. What is keeping the prices up? Well, patient sellers for one thing, and the fact that buyers with a budget of less than $1M are pretty much forced to buy a condo.

The impact of last winter on Toronto condo real estate

Sellers are going to hold out for the best sale price. The sales from last March set a precedent. They changed things. Now, even though listings are up and buyers have more options, sellers have the mindset to wait for an offer like those we saw in March and April. As a result, the fall is off to a slower start than expected.

Looking back to when the rising price trend began last winter, the average PSF for condos in Toronto increased 19.86% from January to April. That was following Vancouver’s tax on foreign buyers, and the presumed transfer of foreign speculators to Toronto. Those sizeable price increases have not been easily corrected.

From February to March, the numbers of sales increased in a typical way compared to other years. But the prices of houses and condos in Toronto shot up drastically. Then in April, Ontario introduced the Non-Resident Speculation Tax (NRST) and prices came down a bit. The neighbourhoods that saw the largest impact of price decreases were North York and Toronto’s East End, but both areas have since rebounded and prices are going up again towards the heights they saw in April.

The big bang from the government intervention in April was the impact on sales. The introduction of the NRST and then the Ontario Fair Housing Plan caused an unprecedented decrease in sales from May to June of -18.79%. A lot of buyers wanted to wait to gauge how the new regulations would impact the market before investing in it, and so activity slowed. As the fall season starts off, we are still following that slower sales trend, which might be the real start of a return to normal market conditions like those of 2012.

What to expect of Toronto condo real estate this fall

Historically, there should be a gradual increase in sales activity through September, a spike in October, and then November will slump off into December, a month where real estate pretty much goes to sleep. The typical sales spike we expect in October is doubtful to reach the levels of last October, but there should be renewed action.

For those who are thinking of selling, this fall is a good time to list your condo. Yes, there is more competition right now, but that can be overcome easily with the right listing strategy. The plus side is that sale prices are steady if not rising. Last week, 45.7% of condo sales sold at or above the asking price, particularly in the $500-700k range. If you’re thinking of making the move from a condo to a freehold house, this could be the right time to start that process.

As for buyers, it’s more of a personal decision. Either it’s the right time to buy for you or it’s not. The old saying in real estate, however, is that it’s better to buy real estate and wait rather than wait to buy. You can never know what the market will do next, but the game becomes a lot easier to play once you’re off the bench and holding the ball.