“Buy the house, not the price”

Reverting to the norm?

The average prices for May 2017 are in, and the results are getting a lot of attention. Buyers seem to be lining up into two camps – the “wait-and-see” school, and the “fortune-favours-the-bold” group. Sellers, meanwhile, are understandably confused.

Is it still a sellers’ market?

Yes. There are many more buyers than sellers, and homes are selling quickly, usually over asking. The average selling price of all GTA homes was $863,910 in May, about 15% up over last May. In many neighbourhoods, detached and semi-detached homes were getting sale prices between 25% and 30% higher than last spring.

Sellers are not all of the same mind. Some genuinely need to sell at this time, while others will have been attracted by the notion of cashing out. This diversity of motives can be confusing. Asking prices are also all over the map. On any given street, one house can be priced drastically under its likely selling price; while another comparable house can come out the same week priced hundreds of thousands of dollars higher. Buyers (and their agents) then have to unravel the conflicting narratives and determine where the likely values are.

Should I buy or should I wait?

This question never gets old. If you have a good reason to buy, and you have a budget set, then yes, buy. Don’t buy just any old thing that comes up in your price range, but buy the home that makes sense for you. If the only homes you want are priced out of your range, then do some soul-searching. Can you alter your criteria? Will your purchasing power increase significantly, or will your needs change in a few years?

If you’re buying a property to live in, think long and hard about how well a home can serve your needs for at least three to five years. “Buy the home and not the price.” It’s not all about price in this market. A qualified home buyer can have choices, and (especially if you’re a first-time buyer) you may need to talk with an experienced Realtor to fully evaluate your options.

If you’re buying a property primarily as an investment, then your criteria will be drastically different and you will be seeking financial and tax advice.

Expert advice – at your fingertips

In a rapidly changing market, you need smart, timely advice, whether you’re a buyer or a seller.

We relish challenges, we like to share, and we’re available to help… You can email us, or ask for James and Joanne at 416-483-8000.

What’s driving the demand?

Each new year tends to mark a fresh beginning in real estate, but 2016 is clearly something special. Take a look at the chart above, and you’ll see how the gap in year-over-year prices started widening in March and April, 2015. Since then, double-digit increases have been reported in various categories of the market, both in the 416 and 905 areas.

Which kinds are going up the most?

By 2015, price increases outside the City of Toronto started to be steeper than those within the city. And as of the first half of this month, it’s clear that the greatest percentage increases are in the most affordable categories. In the 416, the average townhouse is 22% up over this time last year. In 905, semi-detached homes are up 15%, and detached homes are up 19%. These are all categories where first-time buyers can hope to purchase a home on the ground, in the broad range of $500,000 to $800,000.

Condo apartments are somewhat different. The mix is changing to include more new units, often smaller than the older ones. Even so, lower prices are drawing more buyers to condos in parts of the 905, with the result that average apartment prices are now rising four times faster in the suburbs, compared to the 416.

In this context, the price increases for detached homes would appear to be levelling off. There are parts of the city, however, which are experiencing the most explosive price increases ever in 2016. Inner suburbs like Don Mills, with bungalows built on large lots in the 50s and 60s, are seeing price increases of over 20% this year. Meanwhile, a shortage of resale homes in the core neighbourhoods of the old city has guaranteed bidding wars on just about any listing.

You need a plan

Whether you’re in the market for a house or a condo, you need a smart team to plan and execute a winning strategy. We’re available to talk… If you’re ready to start a conversation you can email us, or ask for James and Joanne at 416-483-8000.

New down-payment rules

The new down-payment requirements will affect thousands of home buyers in Toronto and the GTA.

The new rules affect all home purchases where the down payment is less than 20%, and the sale price is between $500,000 and $1,000,000. Purchases up to $500,000, or over $1 million, will not be affected. The changes take effect on February 15, 2016.

Specifically, a buyer will need to provide a minimum down payment of 5% on the first $500,000 of value, PLUS a minimum 10% down payment on the remainder of the price, up to $1 million. (Buyers of properties over $1 million are already required to provide a 20% down payment.)

As an example, a house purchase of $700,000 will require a minimum down payment of $45,000 (up from $35,000 currently.)

A big deal for houses (condos not so much)

The new rule will have the strongest impact on buyers of low-rise homes. 53% of all low-rise home sales across the GTA would have been in the affected category in 2015. First-time buyers looking for a house in the City of Toronto know how few actually sell below $500,000. Condo buyers will probably not be affected, since only 13% of condo apartments are selling in the affected price range.

Family help

This holiday season, first-time buyers who’ve been saving up for a 5% down payment may want to have “the talk” with family members… Is it okay to stay off the property ladder until you can save up more, or is there a justified case for a little family gifting, to speed up the process?

Contact us if you’d like to get objective advice from a mortgage professional… we can connect you with some excellent people!

There’s lots more to know…

If you’re in the market for a house or condo, there’s lots you should know. We’re available to talk… If you’re ready to start your home-buying campaign you can email us, or ask for James and Joanne at 416-483-8000.

 

Where the homes are

Our real estate board just published a report that outlines a dramatic shift in GTA housing patterns. Here are some of the highlights:

Fewer houses, more condos

Back in October 2005, there were a total of 28,852 low-rise homes available for sale in the GTA. This October, there were just 14,994 low-rise homes for sale. (These figures combine resales on MLS, along with inventory from new-home builders.)

Over the same time period, the total number of condo apartments for sale grew from approximately 16,000 a decade ago, to around 27,000 today. (These figures are approximate because some condos under construction are duplicated in the MLS listings.)

Adding the figures up, there were around 45,000 new and resale homes on the market in 2005, and a similar, probably smaller number this October. Meanwhile, the GTA population has risen, from around 5.5 million in 2005, to around 6.5 million today.

It’s clear that builders have shifted their resources: this October, only 19% of the new-construction inventory was in low-rise homes. Ten years before, new low-rise homes were almost half of the total that builders had available.

Condos are the affordable (but shrinking) option

Another striking detail from the study: the average price of a builder’s new low-rise home in October 2005 was $387,369. The average price of a new-construction high-rise apartment today is $440,382. (The price for a new low-rise is of course much higher, at $802,376.) And just as packages of ice cream, coffee and detergent have gotten smaller, so have condos:  The average new high-rise unit in October 2015 was 767 square feet, compared to 908 square feet in 2005.

Condos appreciate less (usually)

Over the past decade, we’ve observed that prices of resale low-rise homes have risen at about twice the rate of high-rise condo prices. This trend will likely continue (bidding wars, so common for low-rise homes, happen far less often with condos.)

One exception: in the past two years we’ve seen prices in older condo buildings increasing sharply, when nearby new construction has prompted a re-evaluation of the older buildings, which often have good space and amenities. This could become a counter-trend.

There’s lots more…

If you’re in the market for a house or condo, there’s lots you should know. We’re available to talk… If you’re ready to start your home-buying campaign, let’s have a conversation! You can email us, or ask for James and Joanne at 416-483-8000.

Snapshot of the Fall Market

Toronto’s fall housing market started right after Labour Day. By early October, the weekly price averages were on a par with those from last May and June.

It looks like a record number of properties are changing hands this year… and yet we still see many areas where there is a “shortage of product.” This housing market is driven by growing demand from buyers.

How much are prices rising, and where?

In September, the number of detached homes sold was virtually unchanged from last year, and sale prices for those rose about 11%. The number of resale condos that sold was up over 5%, and prices for those still went up, more than 5% over last year. Prices for all types of housing rose just as sharply in the 905 areas, as they did in the City of Toronto.

Strategies for buyers

Buyers need to have a game plan. Unless you have an unlimited budget, you’ll need a strategy to get the best possible property that your financing will allow. You need a team on your side, including smart agents who can help you create and carry out your campaign!

That’s where we come in… If you’re ready to start your home-buying campaign, let’s have a conversation! You can email us, or ask for James and Joanne at 416-483-8000.

September takes off

Two weeks after Labour Day, and the Toronto market has been its typical, irrepressible self! Average prices are up as predicted, and home buyers are out in full force.

The chart tells a simple story. Across the GTA, house buyers are competing for properties. Overall, about half of the houses reported sold in the last seven days went over asking. In the central core neighbourhoods, our sample showed a remarkable 71% of sales where the buyers paid over the asking price.

Bidding wars spread

Toronto’s inner suburbs have been experiencing strong price growth for several years, and increased interest from multiple buyers. And most of the 905 area has felt an increase of “downtown-style” bidding wars this year. Figures from Vaughan and Richmond Hill above show that 48% of houses sold last week went over asking.

Based on comments from many agents, both at Sage and other brokerages, there were anywhere from three to ten bids on a large number of houses this month. Even some condos were receiving multiple offers. Meanwhile, a few listings were ignored by buyers, including well-priced houses where buyers may have simply assumed that the final price would be too high.

The right time to sell
There will continue to be a shortage of listings this fall. Do you know someone who may be ready to sell their home? Do them a favour and put us in touch. With our expert marketing, that home will get sold quickly and for the highest price! You can email us, or call James and Joanne at 416-483-8000.

GTA Market Update – Sept. 12, 2015

Watch the dotted line
No, this is not an optical trick! Each month, as we update this chart, our first instinct is to look at the latest price point (the black line). While this is useful to know, our dotted line (in gray)  actually packs a lot of data…

We call it “projected.” The dotted line is actually made up of two components – the shape, and the placement. The shape comes from a calculation of month-to-month changes in the Toronto market, going back about 20 years. The placement is more art than science: In January, we position our dotted line to represent approximately what an average yearly increase would represent for the coming year. Historically, this works out to around 6% for the GTA.

Seasonal behaviour is real
We like the dotted line because it represents a confirmed behaviour: home prices really do fluctuate during the twelve-month period, in a predictable way. At the same time, each calendar year is a bit different, and the dotted line helps us to spot those trends.

This year’s trend sticks out a mile! In early 2015, the average home price in Toronto and the 905 area shot up by $100,000. In August it was down again, by around $50,000. By October, the dotted line is saying, that number could be up another $30,000. The black line suggests that could be the full $50,000 again. We’ll know soon enough.

The right time to sell
There will be a shortage of listings this fall. Do you know someone who may be ready to sell their home this year? We’d like to hear from you. With our expert marketing, that home will get sold quickly and for the highest price! You can email us, or call James and Joanne at 416-483-8000.

GTA Market Update – July 8, 2015

Two things that stand out…
There are two interesting facts buried in the latest Toronto home sale figures: First, the majority of houses in these figures are outside the City of Toronto. Second, the price increases throughout the 905 region are actually steeper than those in the City.

Price increases highest in York Region
Our real estate board’s composite price index for the City of Toronto is up 6.58% (year over year) for June 2015.  Peel Region is up 8.62% and Halton Region is up 8.99%. Higher still, Durham Region is up 12.35%, and York Region is up 12.83%. Even when you isolate the figures for detached houses only, the price increase for the City is still lower than those for the surrounding regions.

Most houses are in the suburbs
About two thirds of the low-rise family homes sold in the GTA this year are in the 905 area. This proportion is reversed for high-rise condos: about two thirds of the apartments sold are in the City of Toronto (but the proportion of condos in the 905 has been increasing.)

Demand is regional
These statistics show that the demand for housing is not limited to the trendy downtown areas; it affects the entire GTA. Reports from cities including Hamilton and Kitchener-Waterloo suggest that increased demand for housing is being felt in those centres also.

Toronto is a global city
Thanks primarily to immigration, Toronto and the GTA are known in every part of the world. Our quality of life is a magnet that will underpin the region’s growth for years to come.

Every home is unique
The value of your home is intensely local. A small semi on a downtown street may well be worth as much as a five-bedroom detached with a pool further out in the GTA. Houses on one block are often worth more than the ones on the next street over, because of real or perceived differences in location or style. Buyers make decisions based on their needs and wishes.

The right time to sell
The numbers point to a continuing sellers’ market. Do you know someone who may be ready to sell their home this year? We’d like to hear from you. With our expert marketing, that home will get sold quickly and for the highest price! You can email us, or call James and Joanne at 416-483-8000.

The Millennials are here

Is this for real?
The chart above shows Toronto home prices shooting up by around $100,000 – over five months. Is this for real? Here are a few points to ponder…
1. The seasonal curve would have us expect a $50,000 price increase from January to May – in a “normal” year.
2. There will be some backsliding in the numbers between now and the end of the year. August and December are typically low points in the curve.
3. The average annual price increase for the Toronto area has been around 7.5% over the past five years. The longer term price increase has been around 6% per annum. This could be a 9% year.
4. The “Toronto” figures you see reported in the media are actually the GTA results. About two-thirds of the houses and one-third of the condo apartments being reported are sales from the “905” area. Prices in 905 are going up just as much as prices downtown.
5. The price increases we’re seeing are not the result of scarcity. Resale listings have actually been increasing; but demand has been going up faster.

The short answer
Yes, this is an unusual year. The usual spring bump has been amplified by currency adjustments and a consolidation of Toronto’s global position. Toronto may not be New York or London, but Toronto is a major city on the world stage.
And yes, the demand for housing is real. The Millennial generation is entering the “household formation” years, and they are an even larger cohort than the Baby Boomers. Their preferences will have – and are already having – a profound influence on the housing market.

The right time to sell
The numbers point to a continuing sellers’ market. Do you know someone who may be ready to sell their home this year? We’d like to hear from you. With our expert marketing, that home will get sold quickly and for the highest price! You can email us, or call James and Joanne at 416-483-8000.

Toronto Homes – 2013 Year End Review

December’s strong finish

December home sale figures were released by TREB, showing a strong finish to the year. Buyers purchased more homes and condos than in December 2013, and sellers received higher prices in all categories. There were fewer new listings during the month, leaving relatively less inventory available at year’s end.

2013 as a whole

The average sale price for GTA homes in 2013 was $523,036, which represented an increase of 5.2 per cent compared to the 2012 average of $497,130. As our chart shows, average sale prices tracked consistently higher throughout 2013. The monthly average for December was in fact 8.9% higher than the corresponding figure in 2012.

Detached homes and other low rise homes showed strong price increases in 2013, both in the City of Toronto and the 905 area. Condo prices also increased, even while condo resales continued to increase in sheer numbers across the region.

Looking ahead to 2014

The immediate pattern is clear to us: Strong demand for houses will continue, with a special emphasis on desirable locations. Increasing upward pressure on prices will force many buyers to compromise on size. Affordable condo prices will allow first-time buyers to switch from renting and build equity. House buyers will consider locations that were not originally on their radar.

“The average selling price will be up again in 2014 and by more than the rate of inflation. The seller’s market conditions that drove price growth in the second half of 2013 will remain in place in many parts of the GTA. Some neighbourhoods, especially those characterized by low-rise home types like singles, semis and townhomes, will continue to have less than two months of inventory,” said Jason Mercer, TREB’s Senior Manager of Market Analysis.

If you’re thinking of selling your home, let us help you with your strategy. We can give you a clear idea of what is happening in your neighbourhood, and we have the marketing expertise to help you take advantage of the demand for housing. You can email us, or call James and Joanne at 416-483-8000.

How high will they bid?

There’s a date for offers

It’s been a fixture of the Toronto real estate scene for about twenty years. A new listing comes on, folks stream through the open house. The number one question… “When’s the offer date?” The surprise is how few buyers actually have a sense of the statistics behind multiple offers.

Do they all sell in multiples?

Multiple offers frequently make up more than half of the sales in “hot” downtown areas. In other parts of central Toronto, between 25% to 40% of sales go over asking during busy times of the year. In quiet times, or in “sleepy” areas (if you can find one), the percentage of multiple offers can fall to about 10% of sales.

How high do they go?

If you’re going to take part in a bidding war, this is an essential statistic that your agent should give you for your specific market niche. The chart above is based on 40 central Toronto houses that sold in multiple offers last week. Half of those bidding wars produced a sale price less than 10% above the listing price. But another third of them actually went 16% or more over.

Do your homework

Play out the scenarios: if two people are bidding, how high could it go? What about six people competing? As a rule of thumb, the more buyers attracted to a property, the higher the final result will be.

At the end of the day, don’t forget that other group of potential sales waiting for you to discover them… the ones that won’t go in a bidding war. They just need that “one” buyer.

If you’re thinking of selling your home or purchasing one, a good agent will provide guidance on pricing and timing strategy. We’d be happy to help. You can email us, or feel free to call James and Joanne at 416-483-8000.