TREB sales for July at 8595 units were 24% higher than July of 2018, and 46% higher than in July of 2017. Sounds impressive but July sales in 2016 and 2015 were actually 15% higher than in 2019! The real takeaway is that the summer/seasonal drop in sales from June to July was only 3% in 2019. That is the lowest drop in the last five years and a strong indicator that the Toronto real estate market is on solid ground and tracking for a year-end sales total of 87,000 units or 11% higher than in 2018.
In trying to get a reading of the market, we like to look at listings and the rate of absorption. ‘New’ listings for the month were up only 4% from last year but ‘active’ listings at the end of July were 9% lower than for the end of July in 2018. This is a strong indicator that prices will continue to move higher. Year-over-year, with TREB’s Home Price Index, the top performing segment was Condos in Peel – up 12% (as we predicted at the start of the year). The only region with a drop was York where prices were 1% lower.
Turning to the condo market itself, sales for July were 14% higher than for July of 2018. For the first time this year downtown condo sales in July were greater than the same month last year. Sales were ahead by 10% and the reason was more listings. ‘New’ listings for July were 4% higher than for July of 2018. But by month’s end, ‘active’ listings were actually lower than the ‘new’ ones generated, meaning condo inventory for buyers was actually less. In the Humber Bay Shores market, sales were up by 18% while new and active listings were unchanged from July a year ago. While year over year price increases for condos downtown averages 8%, the current rate of appreciation has slowed to an annual rate closer to 5%.
We are now into the busiest rental period of the year. Not only are leases increasing in number but rents have increased by 5-10% for the bigger units in the last 30 days. Lease activity in the downtown market was over three times greater than sales in July. It seems like investors would rather rent than sell.
The biggest market segment was for one-bedroom units -63%. Currently, 50% of all units rent without parking. In the one-bedroom market, the number is 68% without parking!
In terms of rents, studios are averaging $1930 – a record. The entry point for a one bedroom without parking is now $2300 on average. The two-bedroom market starts at $3,000. To get a two-bedroom plus den and parking will now cost $3600. There is such a shortage of these units that they are leasing within ten days on market.
The problem is simple: rent controls! People in larger units are not moving. Yet people moving into the City continues for jobs and post-secondary education. There are now over 100,000 non-resident students in post-secondary schools in the GTA. When was the last time a school built a student residence?
Unfortunately, public transportation is not the answer. There are shut downs every weekend and system delays are all too frequent. Driving is also not an option. Construction everywhere has reduced most downtown roads to one lane. Walking, biking, and scooters seem the only option. People will pay whatever it takes to make commuting less than 30 minutes.
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