Toronto real estate prices are rising, but most of the beefy gains are due to one segment. Statistics Canada (Stat Can) updated its new Residential property price index for Q3 2019. The Toronto index shows condo prices are rising much faster than house prices. It also tells us that resale prices are rising much faster than new build homes.
Toronto Real Estate Prices Are Up 2.75% From Last Year
Toronto real estate prices have been on a tear, but not all segments are created equal. Home prices increased 0.58% in Q3 2019, up 2.75% from the same quarter last year. Prices have increased 9.76% from Q1 2017, when the index starts. Breaking this down, we see new build homes are a completely different market from resales.
Toronto Residential Property Price Index
A Toronto home price index, including both new builds and resale.
Source: Statistics Canada, Better Dwelling.
New build real estate barely moved from last year, but made a modest increase over the past three years. New build prices are down 1.16% in Q3 2019, leaving prices up just 0.29% from a year before. Prices are up 5.24% from Q1 2017 – a decent gain, but not quite the overheated market everyone talks about. So what’s everyone talking about? Resale prices.
Toronto real estate being resold has been growing almost twice as fast as new builds. The price of a resale home is up 1.44% in Q3 2019, up 3.93% from the same quarter last year. Prices are up 11.96% from the start of the index in 2017. New builds aren’t rising in price nearly as quickly as resale homes.
Toronto House Price Growth Weighed By New Construction
Toronto single-family homes aren’t close to cheap, but they’re underperforming the index. House prices increased 0.90% in Q3 2019, bringing price up 1.82% from a year before. Prices are now up 4.90% from Q1 2017, so about half the pace of growth as the general market. Drilling down in this segment, we see new builds are where the drag on the index occurred.
Toronto Residential Property Price Index – Houses
Toronto home price index for houses, including both new builds and resale.
Source: Statistics Canada, Better Dwelling.
The price of new builds made a small increase over the past few years. New builds saw prices fall 0.50% in Q3 2019, bringing total losses to 1.10% from the year before. Prices in this segment have increased just 1.23% from Q1 2017.
Resale houses faired much better, but still underperformed the total index. Resale homes increase 1.50% in Q3 2019, bringing prices up 3.04% from a year before. Prices in this segment are up 6.38% from Q1 2017. This is generally considered a large gain, but is below the national number.
Toronto Condo Prices Increased 4x Faster Than Houses
Toronto condo prices are where most of the price movement is at, especially over the past few years. Condo prices fell 0.09% in Q3 2019, but were still up 4.68% from a year before. That brings prices up 22.03% from Q1 2017. The decline on the quarter is almost negligible, but it does show a little cooling. However, that’s probably expected when prices rise over a fifth in such a short period of time.
Toronto Residential Property Price Index – Apartments
Toronto home price index for condo apartments, including both new builds and resale.
Source: Statistics Canada, Better Dwelling.
New condo prices made a pretty big drop in the most recent quarter, but are still up. New condo prices fell 1.73% in Q3 2019, but prices are still up 2.37% from a year before. Prices are up a total of 11.32% from Q1 2017. New condo prices dropping on the quarter is responsible for 100% of the condo index decline in Q3.
Condo resales are where the mother of all price movements occurred. Condo resale prices were up 1.11% in Q3 2019, up 6.56% from a year before. That puts prices 29.79% higher than they were in Q1 2017 – a mind boggling movement. Prices for resale condos were rising over 4x faster than resale houses.
The new Stat Can data gives us a few new insights to ponder, since they all use the same index. Resale prices are rising much faster than new homes are. Condo prices are also rising much faster than houses. The market is placing minimal weight on depreciation and land values.
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Not at all something you see during a bubble.
We’ll ignore that appraisal normally involves writing down wear and tear. Happy special assessments!
It’s Toronto, these things only go up.
One day NYC and London will catch up to us.
https://www.bloomberg.com/news/articles/2019-11-15/nyc-london-and-vancouver-losing-luster-with-luxury-homebuyers
When product quality is not connected to prices…at some point someone’s going to be very disappointed.
I bought at what I thought was a fair price in 2009…only to realize I bought a turd built in 2002. Everything is falling apart from either bad installation/construction, bad design or super cheap materials. I watch Tom Hanks and Shelly Long’s film: Money Pit at least once a year….it resonates so deeply.
That mansion in Money Pit is enormous on a big estate. It reflects what was usual: the house is depreciated and you basically pay for the land, but renovating is a huge undertaking.
In the movie, Tom Hanks pays 200k for the mansion and sets about to renovate it. Adjusted for inflation and exchange rate this turns out to 545k in 2019 Canadian dollars.
In Vancouver and Toronto, you pay 1M+$ for a small attached house on a small plot of land that has barely been maintained and renovated in the last thirty years. The high end of the market in Montreal isn’t much different, it’s only the low end that’s much cheaper.
I bought a 100 year old semi 22 years ago…nothing has failed that had to with its original build quality