August ended the summer with a gentle roar as the Toronto Real Estate Board reported 8,000 units changing hands, representing a 5.7 % increase compared to August of 2014.
Impressive as this may sound, those gains were still 19% lower than the previous month of July’s performance.
To put things into historical perspective, both September and October sales numbers should be higher than August, but lower than July’s.
If historical norms are maintained, with sales currently hovering in the 9,500 range per month (well ahead of last year’s figure), we will likely edge closer to the 100,000 mark by year end.
If this happens Toronto and the GTA will have set an all time record for properties sold in a single calendar year.
How might we explain the strong demand for real estate? Certainly population growth is a major factor; let’s remember that the city has added one million people since the all-time real estate sales record was set in 2007.
Another important factor may relate to investors loosing faith in stock markets.
Volatility and a sinking feeling that the average investor has little or no control over the numbers might lead some to conclude that real estate is a safer place to protect and preserve wealth, while earning stable returns over the long term.
The Condo Market’s Performance
The condo market continues to grow in importance as a viable housing alternative for many. In August, sales in the 416 areas were up by 10% compared to the August 2014’s performance. The detached housing segment was correspondingly lower by, get this, 8.5%.
Downtown condo sales were even stronger – up by 21% compared to last August. At the same time, active-listings were up by just 6%.
This dynamic worked to produce a more balanced market where prices on an annual basis were 5% higher than a year ago.
Compare that to Regions such as York, Durham, and Orangeville where year over year prices were 8 to 14% higher.
The Humber Bay condo market continued to move into better balance. Sales were ahead by 29% from August of last year while ‘active listings’ remained unchanged from a year ago.
Nonetheless, days-on-market for sales in the Humber Bay market remained at 44 days versus the downtown market which hovers at 32 days.
Toronto MLS Average Price Monthly Time Series with Trend Line
This chart plots monthly MLS average price since January 1995. The blue line shows the actual average price. The red line is the trend computed using a 12 month average, which exhibits no seasonal variations or other irregular fluctuations.
Windermere By The Lake: 15 Windermere Ave.
Speaking of Humber Bay, we looked at sales at 15 Windermere By The Lake – just north of the Gardiner on the Queensway.
It is part of Swansea which is an area of mostly detached housing. Completed in 2007, it is an ideal location to walk to High Park, the Lake, and Martin Goodman Trail.
The first unit we tracked was a one bedroom with 9 ft. ceilings, parking, locker and a small balcony. It sold in May of this year for $295,000.
The same unit sold in 2009 for $255,000 which is a 16% increase over 6 years but just 2.2% per year! At just under 700 sf., that works out to $425/sf.
The second unit we looked at had two bedrooms and two baths. Also with 9 ft. ceilings, it had parking, locker and a balcony. It first sold in 2007 for $345,000 and then in 2010 for $355,000 and again in 2015 for $360,000.
Over an 8-year period, the appreciation was just ½ % per year. The price per square feet is only $400. What’s the rational here? While units have a lake view, they are on lower floors and the building has a low ‘walk score’ which requires a car to access most services.
There are currently 7 units for sale in the building out of 308 units. For younger buyers who want to be close to downtown but do not necessarily work downtown, this building can certainly be an entry point and has been overlooked.
Condo Apartment Sales Numbers for August 2015
This chart plots the number of Condo Apartment Sales for the Month of August 2015, organized by designated TREB areas