What's driving Toronto's Housing Prices

RE/MAX Canada posted a great take on the drivers behind Toronto’s market recovery and housing prices. From RE/

The real estate sector can be a real mystery. Prices drive ever higher, drop, and then get back to soaring again with no apparent reason. Or is there a reason? There’s always something responsible for driving up housing prices. For Toronto, the spotlight has returned to detached housing, which has pulled up the average price for the first half of 2019.

Upward Momentum

“With recovery well underway in the detached housing segment, the residential real estate market is starting to fire on all cylinders,” says Christopher Alexander, Executive Vice President and Regional Director RE/MAX of Ontario-Atlantic Canada. “The possibility of more relaxed mortgage rules down the road – in conjunction with today’s low interest rate environment – may serve to spark up the GTA housing market yet again.”

According to the Toronto Real Estate Board (TREB), over half of their districts report upward momentum in average price thanks to single-detached home sales. This is a major contributor to the uptick in average price, in over 50% of the GTA’s neighbourhoods, according to a RE/MAX of Ontario-Atlantic Canada report.

The report looked at trends and developments in 65 TREB districts. They discovered detached home sales were up in close to 88% of the markets. Between January and June 2019, 51% of markets saw increases compared to last year.

Good Old 905

The greatest increases were seen in the 905 area. The report indicates all 30 905 neighbourhoods saw an increase in both home-buying activity and rising sales of detached homes. Of those communities, 43% experienced price appreciation. Meanwhile, in the once-dominant 416 area, 20 of the 35 districts experienced an increase in sales. Detached prices in these areas increased by 57% of the 416 neighbourhoods.

Back on Track

Torontonian detached homeowners can let out a sigh of relief as detached housing has found its way back on track. Year-to-date increases in sales are almost 17% ahead of last year. That is good news, and it indicates a return to more normal levels of home-buying activity.

 “Market share is also climbing, with detached homes now representing 45.7 per cent of all home sales in the Greater Toronto Area, up from 43.1 per cent one year ago,” says Alexander.

Greater Affordability

So, it’s back to wondering why detached home sales are seeing an uptick. In this case, it’s all about greater affordability. However, RE/MAX also found the tried-and-true mantra “location, location, location” to be a factor as well.

First-time and trade-up buyers are choosing to secure prime Toronto real estate before values are on the move again, especially in light of the stress test. The leader, when looking at the percentage increase in average detached home price, is the city’s east end, which includes North Riverdale, South Riverdale, Blake-Jones, and Greenwood-Coxwell (EO1). Here, the average price rose 15.2% to $1,378,987.

Not too far behind is the always-popular Trinity-Bellwoods, Palmerston-Little Italy, Niagara, Little Portugal, Kensington-Chinatown, and Dufferin Grove (CO1). These popular neighbourhoods saw a 12.8% increase in average price, reaching $1,953,511.

Rounding out the top five are:

Third place: Leaside and Thorncliffe Park (C11) held a respectable third place with an 11.2% increase in detached housing values to $2,193,747.

Fourth place: Scarborough’s Dorset Park, Wexford-Maryvale, Clairlea-Birchmount, Longview, and Kennedy Park (E04) with a 7.8% increase to $836,585.

 Fifth place: Toronto’s Junction, High Park North, Runnymede-Bloor West Village, Lambton-Baby Point, and Dovercourt-Wallace Emerson-Junction (W02) with a 7.1% increase to $1,410,057.

Prices in all but the one area in Scarborough still sit well above the $1-million mark.

Top Five: Seller’s Markets

TREB Market Watch reports the top five neighbourhoods as seller’s markets in June. A classic seller’s market is characterized by low inventory levels, which in some cases, can lead to bidding wars. In other words, a seller’s dream.

As well, TREB reported the sales-to-active listings ratio ranged between 62.5% in C01 to a high of 88.8% in E01.

Buyer’s Markets

In about 45% of GTA districts within the 416 area, good inventory means it’s a buyer’s market. RE/MAX noted areas north of Bloor had attracted opportunities for negotiation, particularly for homes that are topping $2 million. Going further south, the market conditions get tighter.

“Heated demand clearly exists for single-detached housing south of Bloor Street, but there are pockets throughout the 416 that are scorching hot,” explains Alexander. “The Oakwood-Vaughan area in C03, where homes can still be had for just over the $1 million price point, is one of those neighbourhoods, while C10, comprised of Sherwood Park, Mount Pleasant West, Mount Pleasant East, is another. The Junction Area, High Park North, and Runnymede-Bloor West Village (W02) in the west end and Leslieville (E01) and the Beach (E02) in the east are also highly sought-after, with close proximity to transportation and vibrant shopping avenues the common denominators drawing younger buyers.”

First-time buyers can look for cracks that can be exploited in York Region to get the best value if they want to get in on the market.

Scarborough Rules Unit Sales

If you want to talk unit sales, the top performers were markets offering single-detached homes under the $1-million price point, with Scarborough’s L’Amoreaux, Tam O’Shanter-Sullivan, Steeles neighbourhood (E05) at the top. This area experienced the most notable upswing when considering the percentage increase in sales. This little pocket saw a 76.2% increase to 148 units sold.

The other areas seeing unit sales increases include:

Milliken, Agincourt North, Agincourt South, and Malvern West (E07) ranked second, with a 57.1% increase and 132 sales.

 Yorkdale-Glen Park, Briar Hill-Belgravia, Brookhaven-Amesbury, Weston, Maple Leaf, Rustic, Beechborough-Greenbrook, Mount Dennis, Humberlea, and Pelmo Park (W04) in the west end reported a 50% gain to 204 units sold.

 Simcoe County’s Essa reported a 43.6% increase in sales of 168 units.

 Downsview-Roding-CFB, Glenfield-Jane Heights, Black Creek, Humbermede, York University Heights, and Humberlea-Pelmo Park (W05) in the west end rounded out the top five with a 37.1% increase in sales to 144 units.

Recovery to the North

There are signs of recovery to the north, with York Region’s Richmond Hill ranking sixth for detached home sales at an average price of $1,380,253. This reflects a 36.1% increase to 615 sales. In general, the northern GTA, an area that was hit hard during the correction, appears to be experiencing recovery.

So, it’s hats off to the detached housing segment as the key factor for what is driving Toronto real estate prices!

Toronto's New Land Transfer Tax - Effective March 1st, 2017

City of Toronto Council has approved changes to the Toronto Land Transfer Tax that mean additional Toronto Land Transfer Tax costs for some home buyers with a closing date on or after March 1, 2017, when it will be harmonized with the provincial LTT.

The following changes to the Toronto Land Transfer Tax were considered and approved by Toronto City Council on February 15, 2017. The changes are effective AS OF MARCH 1, 2017, for real estate transactions closing on or after this date:

  • Added an additional LTT of 0.5% of the value of a residential or non-residential property from $250,000 to $400,000 (an additional $750)
  • Added an additional LTT of 0.5% of the value of a residential property above $2 million
  • Added an additional LTT of 0.5% of the value above $400,000 of a non-residential property
  • Increasing the maximum allowed First-Time Home Buyer Rebate to $4,475, up from $3,725
  • Amended the first-time home buyer rebate program eligibility rules to restrict rebate eligibility to Canadian citizens or permanent residents of Canada

More details on the Toronto Land Transfer Tax, and an online calculator can be found here.

Unionville is still a strong 'sellers market'

Another good article from the Toronto Star today, describing how Toronto is still primarily a sellers market, quite different from how the Vancouver market has cooled considerably recently.

Toronto is still “a bit of a seller’s market” but moving toward a buyers market while the Vancouver market has cooled to the point where bidding wars are largely a thing of the past and buyers have moved back into the driver’s seat, Warren noted.

Markham and Unionville again are maintaining a strong sellers market, as 'for sale' inventory of detached homes is very low.  Despite Toronto's pricing flattening considerably, the highly-desireable areas of Markham Village and Unionville continue to reach new heights.  It's shaping up to be an impressive spring season!

Via Toronto Star