Market Review for August 2012:
The Toronto Real Estate market has proven quite resilient over the past decade, recovering quickly from the US financial crisis and only mildly reacting to events in the Europe (specifically with Spain, Italy, & Greece). Our economy has proven strong one with monetary policy creating safeguards to protect the consumer and increase stability. We have seen that intervention can be a positive thing after watching an American system which failed their consumers, duped investors, and caused a financial meltdown that they’re still struggling to emerge from. After a recent trip to San Francisco for a real estate conference I was able to speak to many optimistic Realtors who are finally seeing an improvement in US market conditions. What does this mean for us up in Toronto? Obviously, being a major trading partner we benefit from improvement in our neighbour’s economy. There have been conflicting reports saying we’re going to continue to experience a housing boom, others say bust. Now, for the only opinion that matters, ours!
We’re numbers people at Spring Realty, we collect more data than your typical brokerage and we’ve broken it down here for you. If you look at our figures (provided direct from the Toronto Real Estate Board data feed) we are indeed starting to see a two (perhaps three tiered) market in Toronto. When going over numbers it’s important to understand that it’s impossible to discuss the Toronto Real Estate market at the macro level. What makes our city great is our highly specialized micro communities full of diversity and energy that experience unique reactions to market changes.
Let’s look back to July 2011. We were experiencing a similarly charged market with multiple offers and low inventory creating heavy demand for homes. The average sale price of a detached home in July 2011 was $691,491 (we’ll be sticking to 416 figures here) compare that to July 2012 $752,431, that’s an increase of 8.86%. Not a bad return for one year. Semi Detached homes sold for $500,796 in July 2011 and $526,979 this July 2012, an increase of 5.23%. Solid appreciation on average. A townhouse sold for $402,902 last July 2011 while they fetch $416,084 in today’s market, an increase of 3.27%. Now ready for some not so nice numbers? An average condo in the 416 sold for $353,189 last July and currently average $347,996 for a net loss of -1.47%. We’ve seen negative month over month figures but this is the first time I’ve noticed a year over year loss in any one category. Proof positive that we are indeed experiencing a two tiered market with houses performing much better than condos.
We are becoming increasingly cautious when analyzing new development condominium purchases for investment as prices in that world are experiencing record highs. Perhaps a good investment vehicle for foreign money and a great opportunity for the end user to select the perfect floor plan but too worrisome for your average local investor. Houses on the other hand seem to be consistently in high demand with detached homes leading the way.
It’s also quite important to understand that we are discussing average figures here. In our Micro market system the average prices may not reflect the true value of a home in Leslieville vs one in a less desirable neighbourhood. The main purpose of this post is to look at the percentage change and understand that Toronto market is not indestructible. Your investment decision needs to be made with great care and understanding the numbers should trump sensationalized stories in the media.
Interested in digging deeper in your specific neighbourhood? Contact us with your neighbourhood, address, type of home and we’ll send you a free home evaluation with specific neighbourhood figures. Don’t forget to register for the Spring Realty Home Finder where you can find properties not yet listed on the MLS with much more useful information. On Facebook and Twitter? Follow us there for real time updates!