Toronto condo prices are still sky high, but are seeing price growth taper. Numbers from the Toronto Real Estate Board (TREB) show that prices are still way up from last year. However, sales are declining faster than inventory. They may also be facing downward pressure from the explosive growth in pre-construction sales.
Condo Price Growth Is Decelerating
Toronto condos are still nowhere from cheap, but they’re having trouble moving the needle. The benchmark price of a condo across TREB was $460,200, virtually flat from the month before. The annual increase is still 24.22% according to TREB. In the 416 the benchmark reached $479,800, a 25.98% climb compared to last year. TREB appears to be mixing old and new benchmark methodologies, which overstates growth. So the update might look a little weird to those that worked with the old numbers.
Source: CREA.
Numbers from the Canadian Real Estate Association (CREA) show price deceleration. Growth appears to have peaked in May 2017, at a 29.13% 12-month price increase. The 12 month growth in September was just 22%. Don’t read this wrong, that growth is still yuuuge. It’s just tapering very quickly. You didn’t expect prices to grow at that rate every year, did you?
Source: CREA.
Editor’s note: We’ll be doing a full comparison of the change in benchmark methodologies, but feel free to skim the Vancouver condo report for a brief overview of the changes.
Condo Sales Decline 27.5%
Condo apartment sales across TREB continued to slide. TREB reported 1,890 sales, a 27.5% decline compared to the same time last year. Breaking that down, 1,362 sales were in the 416 – a 23.2% decline from the same time last year. In the 905, there were 498 sales, down 37% from the same time last year. There’s been a lot of talk about falling sales, but this is a normal market mechanic in my opinion. The higher prices climb, the less people will be able to afford them. There’s also increasing buyer gridlock, because you can’t really upgrade as easily in a hot market.
Source: TREB.
New Condo Listings Decline 6.4%
The number of condo listings in Toronto are actually lower than last year. TREB reported 3,505 new listings, a relatively seasonal jump of 20% from the month before. This represents a decline of 6.4%, when compared to the same month last year. In terms of active listings, which are total listings available at month end, TREB reported 3,927. That’s a monthly increase of 9.29%, and an annual decline of 0.95%. Inventory did decline, but not nearly as fast as sales did.
Inventory is down, but sales are dropping even faster. That said, it’s expected that price growth would decelerate here – as buyers get more options. Our friends at condos.ca pointed out, there’s almost 17,000 pre-sale condos slated to hit the market by the end of November. This flood of inventory won’t provide immediate relief, but will convince a significant number of potential condo buyers to stay in their rentals/mom’s basements until they’re complete. The impact will likely be fewer buyers entering the resale market, and further downward pressure in my opinion.
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I like how I read everyone discuss condos, but no one said they used a different methodology. A 2% error is what whole other markets do in a year. Only in Canada would we accept such a useless read on statistics.
Thanks for this. Another great piece. You clearly understand housing better than most of these clowns that call themselves “professionals.”
We’ve decided to wait it out renting, and fortunately we have a good place (for now). Unfortunately, it seems that a lot of the rentals are offered by individual condo owners, who generally are the worst and most fickle landlords. We’ve been displaced (kicked out) once before by a condo owner who claimed a family member wanted to move in, so we’d much prefer a purpose-built rental and professional landlord. So we have the worst combinations for the non-owners habitats of Toronto — a lack of professionally managed rental housing stock, many thousands vacant units, and politicos who have been very late to do anything about it.
if i were you I’d be very hesitant to wait out the market. The last few months and maybe the next couple months might not be the ideal time to buy but I’ve heard people say I’m going to wait for the price to come down for literally a decade. Unless those people made massive gains in their income they have been locked out by now. Between the strength in the economy and the ever tightening of regulations in Toronto I don’t see how Toronto can overbuild condos in a massive way. If I were you I’d gear up to buy around march as a glut of pre-construction units goes on sale and the stress testing rules put massive pressure on heavily mortgaged mom and pap investors to stop buying. If I weren’t getting ready to buy a house outside Toronto I’d consider investing in a condo. Remember, never move with the herd. If you do what everyone else is going you are almost guaranteed to miss the upswing.
“Price growth deceleration.”
LMAO!!
They’ll do anything to use the term “growth”
Even describe falling prices and sales as “growth.”
It’s all about controlling the minds of people folks. Can’t scare the herd by using terms like “falling” or “dropping.”
Prices are still going up but at a lower rate. If it continues to decelerate then there is a flip and prices come down. Wait…is this Mick Folley aka ManKind aka DudeLove aka Cactus jack? That would explain a lot about this post…if you have not been severely concussed throughout your life, you need to stop typing.
Great article, but there was no mention of the >2% or 4.89% stress test or qualification test. thats going to have a huge negative impact imho.
I’m in the market for a a condo at Yonge and Bloor right now and seller delusion on high prices is rampant … or am I deluding myself on thinking I could be getting a good deal right now? Not sure, but I’m bidding 10% to 20% off list.
I agree that much can be learned and adopted from this common, Thanks for this interesting blog! So Thanks for the blog Pre Construction Condos Toronto GTA and the references