The GTA and Toronto real estate market is continuing its upward trend, according the Toronto Real Estate Board’s Market Watch for May 2016. Both total number of home sales and prices are up across the board.
The big news – 15% overall increase in home prices
The MLS® Home Price Index Composite Benchmark was up over May 2015 by 15%. The MLS Home Price Index is a set of software tools that provides indices on markets in various areas across Canada, and is the most accurate indicator of home price data in Canada. Overall transactions were also up by 10.6% year-over-year in May 2016.
Average prices were up across the board on every property type, with the largest increases being in detached homes in both Toronto and the GTA, represented by the 905 area code on the above chart. The GTA saw the largest increases in home prices in all categories.
The real story is the shortage of inventory
According to the President of the Toronto Real Estate Board, Mark McLean, the story these numbers tell is about the dwindling supply of homes under the Toronto Real Estate Board’s jurisdiction.
“While the record number of home sales through the first five months of 2016 is not necessarily surprising, it does sometimes mask the larger story in the GTA: the shortage of listings, which has resulted in strong upward pressure on home prices.”
While builders are incentivized by the steady upswing in home prices as the result of a lack of supply, they may meet future roadblocks with the Province of Ontario’s plan to expand the Greenbelt, which would minimize areas for new builds in the GTA.
Condominiums see higher price inflation than usual
As supply of the generally more desirable low-rise homes decreases and their price increases, many buyers in both downtown and the 905 area are looking more seriously at condominiums. Jason Mercer, the Toronto Real Estate Board’s Director of Market Analysis, notes in May’s Market Watch that the price growth of condominiums is “well above the rate of inflation.”
Toronto’s Suburbs are becoming increasingly popular–and with good reason!
It was another record-breaking month for the Toronto Real Estate Market and the rest of the GTA. With conditions being as tight as they are in the city, it’s not surprising that properties in the suburbs are going fast–and fetching a pretty penny too! We ranked areas in the GTA according to their price increase, highest selling prices, largest sales increase, and least expensive.
The Ugly Duckling — Transforming an Unattractive Investment Property into a Beautiful Swan
If you’ve been itching to purchase an investment property in Toronto, then you probably know that pickings have been pretty slim lately. Move-in ready houses with curb appeal are often the subject of bidding wars and come with a hefty price tag. The thought of owning a property that will generate immediate rental income is ideal, however, after weighing the pros and cons, and taking price into consideration is it really worth it?
Enter the ugly duckling: The legal triplex that is in need of some TLC. It’s in a fantastic neighbourhood, however, it contains a unit that smells like several unappetizing meals were cooked in it and has carpet that dates back to the early eighties. Overall, it’s not a pretty sight, and you’re uninterested. These are signs of poor property management. Before you move on to the next house, consider this: The property wasn’t built with a smell reminiscent of burnt dinners past, and at one point, that carpet was new. The point is, if you ask anyone involved in property management, we can tell you about some of the most luxurious spaces that have been destroyed in a matter of months due to one bad tenant — we can also tell you have quickly we’ve cleaned them up and made them move-in ready by the next month.
If you’re willing to look past the cosmetic issues and focus on numbers, taking on a property that was poorly managed isn’t such a bad idea. This can often save you money on the initial investment, and after hiring a reputable property management to turn it around, you will then be able to increase the rent and earn a profit.
Signs Poor Property Management
1. Units Not Prepared For Renting – If the state of a unit makes you ask yourself “Who would want to live here?” after viewing it, then you know it’s been poorly managed.
2. Not taking accountability – If the previous managers blame the condition of the property on a bad area or bad tenants, they’re trying to draw your attention away from the real problem – bad management.
3. Vacancy – if there are six units, and two of them have been vacant for months, that’s never a good sign.
4. High Turnover – If the previous landlord couldn’t keep tenants because a) they were unhappy with the living conditions or b) they weren’t paying their rent, then those are both signs of bad property management.
As an investor, signs of bad management can mean dollar signs in the future. Unfortunately, you can’t change the location of a building or a property’s layout without major renovation. You can, however, change your property management company. It should be common sense to anyone that apartments should be clean, painted and livable by decent people’s standards if you want to rent them to decent people.
Returns on property investments shouldn’t require rocket science. Simplified, well-maintained properties yield great results. This includes responsible tenants who are properly screened, which results in higher rents, no vacancies and low-turnover. By hiring a reputable Toronto property management company, you can turn an ugly duckling into a beautiful swan, and attract the type of tenants you want to rent to. Toronto is a huge metropolitan city, and although there may not be thousands of investment properties to choose from, there are thousands of responsible, income-generating tenants to choose from. Sometimes the best returns are the ones that come from the most unexpected sources.
In recent news, you may have heard rumours that buyers were “treading more cautiously” as they entered the fall market. The opposite couldn’t be truer in Toronto. This morning, Toronto Real Estate Board President Mark McLean announced that Greater Toronto Area REALTORS® reported a record number of transactions for the month of September through TREB’s MLS® System. There were a combined 8,200 home sales reported for September 2015. This result was a 2.5 per cent increase compared to September 2014.
For the first nine months of 2015 TREB MLS® sales amounted to 80,331 — a record year-to-date figure. Furthermore, there was a 9.5 per cent increase compared to the first three quarters of 2014.
“We are on track for record home sales reported through TREB’s MLS® System this year. Barring a drastic shift in the economy over the next three months, total transactions reported by TREB Members in 2015 are expected to be at or near the 100,000 mark. This is a testament to the importance that GTA households put on home ownership as a long-term investment,” said Mr. McLean.
The MLS® Home Price Index (HPI) Composite Benchmark Price was up by 10.5 per cent year over year. The average selling price for all home types combined was also up by 9.2 per cent annually to $627,395. Growth in the MLS® HPI Composite Benchmark and the average price was driven by the low-rise market segments, including detached and semi-detached houses and townhouses. (October 5, 2015 –TREB)
If you think housing prices in Toronto are high now, brace yourselves. Industry experts and economists expect them to surge as Canada’s biggest city saw another record month in June. Last week, newly appointed Toronto Real Estate Board President Mark McLean announced that GTA REALTORS® reported 11,992 sales through TREB’s MLS® System in June 2015. This number represents an increase of 18.4 per cent compared to the result for June 2014—which paled at only 10,132 sales.
Overall, selling prices for all home types across the city were significantly higher when compared to the numbers for June 2014. Last month, the MLS® Home Price Index (HPI) Composite Benchmark was up by 8.9 per for the same period in 2014, while the average selling price was up by 12.3 per cent in a year-by-year comparison, to $639,184.
According GTA REALTORS®, “High-end homes have accounted for a greater share of overall transactions this year compared to last year.” This is a key factor in the rate difference between the average price and the HPI composite benchmark, which is regarded to be a more accurate system of measuring Toronto Real Estate Market conditions.
Following its upward trend, the average price of a detached home in Toronto was at an astounding $1.05 million, a 14.2 surge over June of 2014. The surrounding 905 area also saw an increase of 15 per cent to $738,000.
Toronto and Vancouver represent Canada’s strongest markets, and if the Bank of Canada cuts its rates again, we can definitely expect another boost in sales. Despite low mortgage rates, the affordability of housing, particularly detached homes remains out of reach for many in these cities. As active listings are still far and few in between, bidding wars for determined buyers show no sign of stopping—nor does the strong upward climb of our robust market.
Mr. McLean could not have started his new career at a better time. With the Pan Am Games in full swing and our city receiving international recognition and accolades, it is clear to local residents that Toronto and its surrounding area is home to a wealth of culture and an economy with a very promising future.
Toronto’s weather isn’t the only thing that’s heating up this summer.
The shortage of active listings reported through Toronto MLS ®, drives demand and average selling price of homes up
With the average selling price of a home in Toronto currently sitting at $649,599—it’s safe to say that Toronto’s real estate market shows no signs of cooling down this summer. Last week, Toronto Real Estate Board President Paul Etherington announced the market figures for May 2015, as reported by Greater Toronto REALTORS®. According to sales recorded through the Toronto Real Estate Board MLS® system, there were 11,706 home sales in the GTA last month—a 6.3 per cent increase compared the same time last year.
The number detached houses for sale in Toronto, however, were lower due to the limited supply of active listings. This hasn’t discouraged determined homebuyers Toronto’s housing market. With the average price of a detached home in Toronto reaching an astounding $1,115,120, Toronto real estate agents stated that buyers still waged bidding wars on the hot commodities last month.
Out of all the home types, condominiums saw the largest increase in sales, in a year by year comparison as sales of these high-rise homes were up 12.9%, compared to last year. This could possibly be due to the number of first-time buyers taking advantage of low mortgage rates. As mentioned in a previous article, property ownership maintains a priority for many families and is considered one of the best long-term investments—both financially and emotionally.
The health of our real estate market is unwavering, and many economists project that it will see steady growth well into the rest of the year. As a cultural hub that attracts both Canadian and International investors, Toronto’s economy remains strong and shows signs of socio-economic and overall infrastructural growth.