Real Estate Market in Toronto, Vancouver, and Canada
VREP welcomes back Founder of Truecondos.com – Andrew Lafleur. Andrew is based in Toronto and is also a pre-construction specialist, focusing on new construction.
There has been a lot of noise from the press recently regarding the real estate market across Canada, and more specifically, that the market is slowing down. However, this trend is not in line with what is occurring in Vancouver right now. June stats show the market is up and it’s busy. In actual fact, the media are referring to what is occurring in Toronto, which is why we invited Andrew back to explain exactly what is going on.
A general misconception is that all of Canada’s housing market is on the decline. This argument is made from applying the part to the whole, or Toronto to the rest of Canada. Every market is different since, as Andrew states, real estate is hyper local. While it is important to know what is happening in other markets, a real estate decision should be based on what is taking place in a specific locality. In fact, the Real estate market can be different from street to street, let alone across cities and provinces.
Toronto Real Estate Market
The market in Toronto has softened considerably due in part to the introduction of the 15% foreign buyers tax and other measures related to the Fair Housing Plan (rolled out at the end of April 2017). The market had peaked at the end of March before things took a downward curve, and presently there are properties sitting on the market with no buyers.
Taking the Greater Toronto area as a case study, the detached housing market is doing the worst amongst property types. The sales to listing ratio for the detached housing market is around 31%, meaning approximately 3 out of every 10 homes will sell. It is a borderline balanced-market right now. This was a far cry from a few months ago when things stood between 90% to 100% sales to listing ratio. For the Condo category, there is a sale to listing ratio of 63% which is an indication that the market is not doing badly as a whole. Attached is definitely out-performing detached.
It’s easy to look at the headlines and take what you see at face value. However, both of the sales ratios that Andrew outlines here, to us, are not great cause for concern whatsoever.
Misconceptions About The Real Estate Market
The latest talk of the town, especially among real estate commentators in the media, is the impending doom in the housing market. Media has a substantial impact on how the market is perceived overall. On the contrary, the market has softened slightly to what could be seen as normal.
For example, if you look at the numbers, Canadian Real Estate is still very active. Imagine going 170 on the highway, then slowing to 120. It feels like everything is really slow, almost like you’re standing still. But you are still travelling above the speed limit, going at a good clip! And this is essentially what is happening with current market perceptions. It feels slower, for sure, but that doesn’t indicate a market crash.
The falling month over month average prices forms the basis for many media arguments. But this is an unfortunate conclusion as it is only measured within a short period. In any given year, average prices will go up and down. You need to take longer intervals to recognize actual market trends. So, no need to panic.
There are, however, some current issues to keep an eye on:
- The higher end of the market is slower, and the lower end of the market is busier. This has been ascribed to government measures and limitations set on international buyers.
- Interest rates are slowly rising. In fact, that does mean that the economy is getting stronger. The trade off of a robust economy is that it will be tougher for some buyers to get into the market.
Where To Find Bargain Houses In Toronto
On a positive note for Toronto, however, is that it’s the time to buy, especially in the detached housing market. It is easy to find sellers who still believe the headlines and will sell at bargain prices.
Suburban areas in the North of the City (Toronto) like the York region is undoubtedly a good place to find a bargain for detached houses. These areas have the lowest sales to listing ratios as there are fewer buyers.
However, Traditional neighbourhoods in the core of the city like Old Toronto, Danforth, Dale are still very buoyant. On the East Side, like Annex, Lawrence Park, or areas that are generally along the subway lines and are well-established, there are many great properties that are still getting up to 10 offers. The core areas are always going to slow down last in a bad market and will always pick up first when the market bounces back.
Real Estate Market and the Annual Market Cycles
There is also a seasonal effect we should highlight. This year, the market peaked early in March/April, which is not the usual case as things generally peak in May/June before slowing down again in July/August. Many sellers will not do the sensible thing by taking their property off the market in the Summer and re-listing in the Fall. This has made inventory to be higher than usual in Summer.
In Vancouver, summer time is generally slow. Toronto’s market is similar. This is a natural cycle. July and August are traditionally slower months; things tend to always pick up in the fall.
If you want to find out more about Andrew , you can check out the website: www.truecondos.com, or follow him on Twitter @andrewlafleur