The Chestnut Park Blog
Prepared by: Chris Kapches, President & CEO
June 16th, 2014
The pace of Toronto’s residential resales accelerated in May. More sales were reported in May than in any month this year and last year. The highest number of sales reported in 2013 was 9,946 in May of that year. This May 11,079 properties were reported sold. This represents an 11.4 percent increase compared to the 9,946 properties that were reported sold in May 2013. The 11,079 sales was a record, the highest number of sales ever reported for the month of May for the greater Toronto area.
It is not surprising given the market’s performance in May, that in addition to record sales volumes, the monthly average sale price also hit a new record. The average sale price for all properties sold in the greater Toronto area came in at $583,204, the highest average monthly sale price on record, surpassing the previous high of $578,118 achieved only last month. May’s average sale price was 8.3 percent higher than the $540,544 average sale price the greater Toronto resale market delivered last May.
Not only did both sale prices and volumes produce records in May but these records were achieved in record time. The average days on market was only 21 days. Last year it was 23. In many trading areas the pace of sales was even faster. For example in Toronto’s eastern districts, all reported sales took place in only 15 days, a remarkable pace. Not only did all properties sell at a record pace, but all reported sales achieved sale prices that equaled or were greater than the list price. In the City of Toronto all properties sold for 101 percent of their asking price. In the eastern trading areas they sold for 103 percent of their asking price.
The market was also strong at the higher end, properties having an average sale price of $ 1 Million or more. In that category 946 properties were reported sold in May. This represented a 34 percent increase compared to the 702 sales that occurred in this category in May last year. It is interesting to note that 171 properties were reported sold having an average sale price exceeding $ 2 Million or more, a 43 percent increase compared to the 120 that sold last year. A cynical analysis would hold that with average sale prices increasing at the pace they have, what was an “average” house only a few years ago is now classified as a high end sale.
The most expensive place to live is in Toronto’s central districts. The cost of a detached home in central Toronto is now $1,441,785. A semi-detached home is selling for $ 901,659. Prices are no where near as high in the 905 region. The average price of a detached home in the 905 region is only $648,439, less than half of what it would cost to be in a “similar” home in Toronto’s central districts. A semi-detached home can be purchased in the 905 region for $443,644… $458,000 less than buying a semi-detached home in Toronto’s central districts
Not all of the City of Toronto is as pricey as the central districts. The average price of a detached home in Toronto’s western districts came at $762,528, and a similar property can be found in the eastern districts for $631,594. Semi-detached properties, as expected, sold for less on average. In the western districts the average sale price in May was $553,912 and $ 637,347 in the eastern districts. Interestingly and no doubt due to short supply and the variety of housing quality, there is almost no difference in the average sale price between detached and semi-detached properties in Toronto’s eastern districts.
Toronto’s overall average sale price would have been higher if not for condominium apartment sales. This sector of the market, though robust, is simply not selling at the same pace as detached and semi-detached sales in the City of Toronto. In May 1,565 condominium apartments were reported sold in the City of Toronto. Including the 905 region there were 2,234 sales in total, or just over 20 percent of the entire market place. The average sale price for condominium apartment sales in May was $401,809 (also a record). Unlike other housing forms it took 29 days for all sales to take place and for average sale prices that were only 98 percent of the asking price. The difference between condominium apartment sales and freehold in the City of Toronto is inventory. In May there were 5,133 active condominium apartments available for sale. The total number of properties available for sale, including condominium apartments, was only 8,310. In other words condominium apartments available for sale represented more than 60 percent of all available properties for the entire City of Toronto.
Generally inventory levels remain low. At the end of May there were only 18,931 properties available in the entire greater Toronto area. This is 1 percent less than the 19,080 properties available for sale at this time last year.
Going forward we should anticipate more months like May. The market is strong for a variety of reasons, but predominately because of low mortgage interest rates. As this report was being prepared most lending institutions were offering 5 year fixed rates less than 3 percent. There is no likelihood that rates will be increasing in 2014. As a result, the market is on pace to deliver more than 90,000 property sales in 2014. This would make 2014 the second best year on record for property sales, surpassed only by the 93,193 reported sales achieved in 2007.