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May 2023 Toronto Market Report

It is hard to believe that in a span of fifteen months the Toronto and region real estate resale market has gone from record breaking sales and house prices to a precipitous decline, not seen in decades, to a market resurrection in May. Although May did not match the dizzying highs of February and March of 2022, resale results were nothing short of impressive.


May marked the forth consecutive month of rising sales. What was particularly impressive was the increase in the number of reported sales compared to April. The market reported 9,012 sales in May, a 20 percent increase compared the 7,531 achieved in April, and a 25 percent increase compared to the 7,226 reported sales in May 2022. Whether this accelerated pace can continue into June will depend on a number of factors that will unfold during the course of the months to come.



Clearly the demand for ownership in the greater Toronto region remains strong. Satisfying it continues to be a problem. Government at all levels have simply failed to provide the necessary housing that the region’s high levels of immigration have necessitated. What new housing that has been provided has become even more expensive due to excessive regulatory barriers. A recent C.D. Howe study estimates that in Toronto new homes are $350,000 more expensive due to the regulatory burdens that are choking the housing supply.


It is no surprise that for the forth connectivity month the average sale price for all properties sold in the Toronto region once again increased, which includes condominium apartments which formed almost 30 percent of the 9,012 reported sales.



The average sale price of condominium apartments was only $748,483 across the region. Detached properties came in at $1,556,566 (but $1,913,132 in the City of Toronto) and the average sale price of semi-detached properties was $1,198,185 (and $1,398,821 in the City of Toronto). What these numbers demonstrate is that the exodus to regions outside the City of Toronto that took place during the pandemic appears to have reversed. During the pandemic demand in the 905 region caused average sale prices in the region to rival Toronto prices. Since January prices throughout the combined City of Toronto-416 region have increased by more than 15 percent.


Demand and supply are having a major impact on average sale prices. In May 15,194 new properties came to market. This was almost 20 percent fewer properties than came to market last May (18,687). As a result of the fewer properties coming to market and the high number of sales that were achieved in May, beginning in June there were merely 11,868 properties available to buyers, substantially lower than the 10 year average for available listings for the month of May.


Given the shortage of available properties on the market it is not surprising that months of inventory for the region has dropped to 2.2 months and that all sales (on average) took place at 105 percent of their asking price. And these sales took place in only 14 days! Even though the average sale price of detached properties came in at almost $2,000,000 in the City of Toronto, all sales took place in 13 days and at 105 percent of their asking price. Semi- detached properties, which had an average sale price of almost $1,400,000, all sold in a mere 11 days and at 111 percent of their asking price. Semi-detached properties in Toronto’s eastern districts all sold in an eye-popping 7 days and at an astounding 118 percent of their asking price. These are truly incredible market statistics and speak to a market very reminiscent to that at the height of the pandemic market, a phenomenon that only a few months ago we thought would be a historical phenomenon never to be repeated.


The supply issue is of particular concern in Toronto’s detached and semi-detached property sectors. At the end of May there were 1,286 active detached listings in Toronto. In May 970 detached properties were reported sold. At the end of May there were only 261 active semi-detached listings in the City of


Toronto, fewer than the 285 that sold in May. These numbers point to a crisis in supply.


Early June results are indicating that the resale market may be plateauing. This is due to three factors. The lack of supply, particularly in the detached and semi-detached housing sector, the average sale price hovering at $1,200,000, and high mortgage interest rates coupled with the added stress test, combined are making buying a home in the City of Toronto and the surrounding region prohibitive. The threat of a potential benchmark rate hike by the Bank of Canada is also causing apprehension amongst buyers. June’s results will be telling as to the direction of the residential resale market for the second half of 2023.


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April 2023 Toronto Real Estate Report

As forecast in March’s Market Report, April’s residential resale market continued its upward trajectory for the third month in a row. Sales volumes increased by more than 9 percent compared to March and the average sale price, which also bounced for the third month in a row since January, increased by more than 3 percent compared to March.



This trajectory is unlikely to change in May. It would have been even steeper if not constrained by affordability and the alarming decline in supply.


Although April’s 7,531 residential sales were 5.2 percent less than the 7,940 sales achieved last year, they reflect growing buyer confidence and acceptance that the exceptionally low financing costs enjoyed during the pandemic are a thing of the past. Demand has not abated, pushed to extraordinarily high levels by growth in population in the greater Toronto region, driven years of high levels of immigration. Between the years 2018 and 2022, more than 600,000 immigrants have moved into southern Ontario. New housing supply has not kept pace with this growth in population.


As a result of the eye-popping demand, average sale prices continue to rise in April, even in the face of high mortgage financing costs and borrower stress testing which adds 2 percent to the interest rate at which borrowers are attempting to qualify. April’s average sale price of $1,153,269 was only 7.8 percent lower than the average sale price achieved in April 2022. When interest rates begin to decline, which is expected in 2024, we could see average sale prices increasing to the stratospheric heights achieved during the pandemic. Six months ago this possibility was inconceivable.



The number of new properties coming to market became even more troubling during April. In April only 11,364 new listings became available to the many buyers waiting to buy. This is a 38 percent decline compared to the 18,416 properties that came to market last April. More troubling is the available supply as April came to an end. At the end of April, there were only 10,373 active listings, more than 20 percent less than the 13,092 properties available to buyers at the end of April last year. April marked the first month since March of last year when active listings were fewer than the corresponding month the year before.


Given the demand and the lack of supply in the greater Toronto area, it is not surprising that all available properties (on average) sold in only 17 days. The speed at which properties sold in April is quickly approaching the speed with which properties in the greater Toronto area sold during the height of the pandemic market – 8 days! All properties in the City of Toronto sold in only 18 days (slightly slower due to the preponderance of condominium apartment sales) but incredibly for 103 percent of their asking prices. In Toronto’s eastern districts all properties, condominium apartments, detached and semi-detached properties sold in only 11 days and for an eye-popping 109 percent of their asking prices. Semi-detached properties in the eastern districts sold in only 8 days at 115 percent of their asking prices. The average sale price of semi-detached properties in Toronto’s eastern districts was $1,223,687. Across all of Toronto the average sale price for semi-detached was $1,326,462. Detached properties came in at $1,787,752

Shockingly there were seven eastern districts that reported less than five semi-detached property sales – simply because there was no supply!


Fast sales and sale prices exceeding asking prices were not restricted to the City of Toronto. All property sales in Halton, York, and Durham region sold well above their asking prices, 101, 105, and 107 percent above asking, respectively, with all properties selling (on average) after only 15 days on the market.


The Toronto and region residential resale market is quickly moving towards crisis levels. Governments now have no one to blame but themselves, and hopefully are beginning to accept that the housing crisis can not be improved by restrictive legislation. At the federal level, there is a prohibition on foreign buyers purchasing residential properties in Canada. At the provincial level, there is a 25 percent (of the purchase price) tax on foreign buyers. At the municipal level (City of Toronto) there is a 1 percent vacancy tax. None of these legislative actions have addressed Toronto and the region’s housing issues. Toronto’s resale market is driven by domestic demand, as numerous studies have demonstrated. Population growth, which is expected to continue, requires appropriate levels of new housing, which have not been forthcoming. It is safe to forecast that the residential resale conditions that have clearly manifested themselves in April will continue and intensify as we move towards the second half of 2023.



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In Ontario, you need a lawyer if you're buying or selling real estate. But just because they're necessary, doesn't mean they're all equal. I'm going to provide a step-by-step guide to help make the process of choosing the right one a little less overwhelming.


Assess Your Needs


The first step is to understand what you're looking for. As a potential client (or a Realtor making a referral) you need to narrow down the issue you're looking to solve.


Do you need a lawyer to represent you in the purchase of a condominium? Are you looking for help preparing a land severance application? Need to review a commercial lease? Maybe you're selling a commercial plaza?


Real estate law is a funny niche where even within the practice area, some lawyers only handle certain types of files.


Once you've narrowed down the problem you need solved, you can begin searching for some options.


Search for Options


Google is a good first step - but you need to know how to use it properly. Don't just search "real estate lawyer near me". You're going to get a bunch of sponsored listings and usually they'll be from websites where you'll be hard pressed to find the actual lawyer's name.


Instead, be specific in your search. If you're looking for help on a farmland transaction, include that in your search - "farmland real estate transaction lawyer". The more specific your google search is, the more likely you're going to find relevant content and pages written by a lawyer with knowledge on the issue. This will always be a better lead than the generic "real estate lawyer" ad.


Seek Referrals


Law is an industry that's a little behind the times. What do I mean by this? Well, I know many great lawyers with ancient looking websites - and sometimes even no website at all. 


This doesn't mean they're not great at what they do. So when you're gathering your list of lawyers to evaluate, make sure you ask around for referrals. Ask your Realtor, ask a colleague, ask your broker of record, and definitely ask other lawyers (we tend to know which other lawyers are good at their jobs).


Evaluating Credentials and Experience


Now that you've got a the name of a few lawyers, you need to start evaluating. Here's a few things you can do to assess your options:


  • Read reviews: I'd skip any reviews posted directly on a lawyer's website, these are hand picked and always positive. Instead look at their google business listing and see what customers had to say. If there are negative reviews, look for context before crossing them off the list. Sometimes the complaints are illogical or come from people who were never even clients.
  • Look for specialization: Back in the day, a lawyer was a jack of all trades. The modern approach, however, is specialization. Real estate law requires in-depth knowledge of many moving parts. Make sure you're hiring someone who specializes in real estate law and is dealing with these issues everyday. Don't hire a family lawyer who does a few real estate deals on the side. 
  • Schedule a consultation: See if you can get the lawyer on the phone for a few minutes. Assess whether they communicate clearly and takes the time to explain complex issues. This is a great indicator for a successful working relationship.
  • Cost is an important consideration. While the more expensive option doesn't always mean better, the cheapest option can cost you more in the long run. It's important that you search for value, not just price. Know what you're getting, who you're getting, and the quality of representation that comes with it.


Comparing Costs


It's also important to understand how real estate lawyers price their services. Most residential transactions are based on a fixed fee. But even this can get confusing. 


Real estate lawyers usually charge a legal fee, plus disbursements. Disbursements are the costs incurred during a real estate transaction, like search costs, registration fees, title insurance, and software fees. This means that the actual price you pay at the end will be more than the quoted legal fee you receive at the beginning. 


Some lawyers are moving to an "all-in" fee structure that includes all your legal fees and disbursements into one neat, clean price - no surprises. 


While one method of pricing isn't necessarily better than the other, it's important to understand the difference when comparing. When you receive a quote that says "plus disbursements", be sure to ask for a disbursement estimate. If the lawyer can't give you one, that's probably a red flag.


Know Your Real Estate Lawyer's Name


This is my favourite piece of advice to give when someone asks me how to choose a real estate lawyer. It's so simple, yet so good. "Know your real estate lawyer's name". 


I talk to so many people who ended up using some online service or a big law firm, and they have no idea who their actual lawyer was. They communicated through assistants and clerks only, and had no actual communication with their "lawyer" at all.


Think about it this way, if a problem arises do you know who you're actually calling to get an answer? Better yet - can you get them on the phone? If the answer to either of these is no, keep looking for the right real estate lawyer.


Summary


  • Identify your specific real estate needs to find the right lawyer for the job.
  • Use detailed online searches and seek referrals from trusted sources.
  • Evaluate lawyers' credentials, experience, and communication skills.
  • Compare costs, considering both legal fees and disbursements, and focus on overall value.
  • Ensure direct communication with the lawyer who'll handle your case.

Written by
Zachary Soccio-Marandola
Real Estate Lawyer

(647) 797-6881
zachary@socciomarandola.com
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