September Market Watch: GTA & City of Toronto

By Elli Davis, October 12, 2012

It’s unbelievable how fast this year is flying by. It is October already! What does this mean? Well, apart from the obvious (our increasingly warm clothes and drinks), this new month also suggests that we can summarize the housing market in September. How did the Greater Toronto Area and the City of Toronto do last month?

Greater Toronto Area

Stricter mortgage lending rules continue to have an effect, and as Greater Toronto Area Realtors reported, 5,879 homes were sold through the Toronto MLS system in September 2012. In the same month last year, 7,422 transactions were recorded — 20.8 per cent more than this past month. The drop is obvious, but the fact that there were two fewer working days this last month than in September 2011 (weekends are rarely ever productive with regard to sales) had a noticeable influence. On a per-working-day basis, sales only declined by 12.5 per cent.

TorontoMLS Sales by TREB

Now let us look at September data in more detail. Exactly 2,864 detached homes were sold in the GTA, which is a decline of 16 per cent from September last year. Sales of semi-detached homes declined even more significantly. Only 652 dwellings of this type were sold in the GTA last month, which means a 20 per cent year-to-year decrease. Similarly, the number of townhouse transaction went down. In the GTA, a decline of 16 per cent was recorded, meaning that only 920 were sold last month. Sales of condominium apartments plummeted most drastically. Compared to September 2011, the number of sold condos declined by 27 per cent to only 1,329.

From these numbers, you can obviously see that a noticeable decline was recorded in sales of all the major home types in the Greater Toronto Area. However, an increase was seen in both new and active listings. New listings rose by 4 per cent over the year, from 14,629 to 15,220. Active listings recorded a more noticeable growth of 15 per cent, going up from 18,793 in September 2011 to 21,621 last month.

As usual, prices went up as well. The average price for a home was $503,662 last month — up 8.6 per cent from $463,916 seen in September 2011. Prices increased for all major home types. The average price for detached homes was $627,111, which is about 8 per cent more than a year ago. The average price for semi-detached dwellings in the GTA increased quite noticeably over the year: it rose by 12 per cent to $482,487. The average price of townhouses increased as well. In the GTA, it went up by 6 per cent to $370,196. Prices of condos rose by 6 per cent to $349,454 in the GTA. Interestingly, if we exclude the City of Toronto, condominium prices only grew by 1 per cent over the year.

The City of Toronto

In the City of Toronto, 2,255 homes were sold last month. In all housing types, a noticeable downfall was recorded. Precisely 767 detached homes were sold in the city this past month — 27 per cent less than it was in September 2011. With regard to semi-detached dwellings, the fall was less drastic: 273 semi-detached homes were sold in our city — down 15 per cent from the same period last year. A decrease was also seen in townhouse sales: sales of this type of residence went down by 17 per cent to 258. Finally, just like we saw with the GTA as a whole, sales of condominiums decreased the most significantly in the City of Toronto. They went down by 29 per cent to 395.

Unsurprisingly, prices were up in September 2012. The average price for detached homes in the City of Toronto was $781,826 last month, up 10 per cent from September 2011. The price of a semi-detached home in our city increased by 16 per cent to $604,963 over the year. The average price of Toronto’s townhouses rose by 7 per cent to $423,732. Prices of condominium apartments increased by 8 per cent from September 2011 to $377,422. The overall condominium price rise was thus mainly caused by the increase recorded in the City.

TorontoMLS Average Price by TREB

Prognosis

We cannot deny that the housing market seems to be cooling quite noticeably in the City of Toronto, in the GTA, and generally in Canada. But we should not forget about Toronto’s Land Transfer Tax when looking at home sales in the city; it partly explains the decline is sales inside the city and therefore quite a drastic fall in detached homes and condo apartments in Toronto last month and a general downfall recorded in last couple of months. Obviously, the City of Toronto, as a part of the GTA, has a noticeable influence on the overall sales in the GTA: we cannot expect a huge increase in the area if the city is performing poorly.

The Land Transfer Tax cannot be blamed for everything, obviously; it is just a part of the possible explanation. Overall, the decline in sales over the last few months is not all that surprising, according to John Andrew from Queen’s University.

Predicting the future is always very difficult. Sales depend on a variety of factors, but let us be honest with ourselves: the outlook for the rest of 2012 and for 2013 is not extremely positive. The Canadian Real Estate Board predicts home sales in Ontario to decrease by 3.6 per cent in 2013. The prediction for Canada as a whole is a fall of 1.9 per cent, suggesting the Ontario market (including the Greater Toronto Area and the City of Toronto markets) is expected to go through tough times next year.

On the contrary, as the numbers in this article clearly show, prices of all home types keep increasing. The rise is not expected to stop any time soon. All prices (but particularly those of low-rise home types) are expected to continue rising over the rest of the year, TREB’s Senior Manager of Market Analysis, Jason Mercer, stated in the TREB September market report. While I stand by my statement that predicting the future is difficult, there is no doubt in my mind that Mercer’s expectations will come true.

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