House sales up 21% in mid-October, but demand for downtown rentals also surges

Susan Pigg – Toronto Star

Housing sales remain strong across the GTA — and so does the unrelenting demand for rental condos — halfway through the month of October, according to figures released by the Toronto Real Estate Board.

House sales were up 21% mid-month compared to the same period in 2012. That’s some 13% higher than the 10-year average for sales in October, TREB noted.

Comment: Again, me with the context. There were 3,477 sales in mid-October 2011, compared to 3,460 this month. Almost identical, a difference of only 17 sales. This is why I keep saying we need to toss a lot of the 2012 data, it is too flawed. Sure, it looked terrible compared to 2011, but then 2013 looks amazing compared to 2012. But, take 2012 out and 2013 and 2011 are almost the same.

“It seems clear that we have more than recovered from the temporary dip in residential transactions that resulted from the onset of stricter mortgage lending guidelines,” in July of 2012, said TREB president Dianne Usher in a statement.

Comment: Nope, recovered to within 0.5% of where we were before. Not really “more than recovered”, more like we just went back to where we were before.

The average sale price was up 7.3%, with the average transaction price coming in at $536,301 as of mid-October, in large part because high demand for low-rise houses continues to outstrip the supply listed for sale, says TREB.

Usher blamed the tougher lending rules imposed by Ottawa last July and Toronto’s land transfer tax, which has made the cost of moving expensive enough that TREB believes it’s discouraging many homeowners from moving up and listing their homes.

Comment: We have had supply issues for a good 6-7 years now. It is not the land transfer tax that is causing the problem, trust me. It is simply that there are more and more people coming to Toronto, more people wanting to move up fromn condos to homes, from starter homes to bigger houses, etc. There are only so many houses to go around, and a lot of people want them. The more condos that are built, the more first time buyers and renters there are. All of them will want to move up at some point – that is the problem. Empty-nesters and baby boomers are simply not leaving their homes. So as the pool of home buyers increases every year, the supply of houses stays static. This is a problem that is only ever going to get worse as time goes by.

Realtors are finding that many Toronto homeowners are opting to spend the money they would fork out on real estate fees and the double land-transfer tax on renovations instead. That’s happening at the same time as demand for city homes, within reach of transit and an easy commute to work, has increased.

Comment: I don’t think that is it. You have empty-nesters and baby boomers deciding to age in place. It is not a money thing, that really has nothing to do with it, I think. Just that older couples are healthier and more active. They want to keep their house in the city. They do not want to downsize to an 800sf condo. They change their home to suit their needs, rather than move. This is what is happening. My parents are a classic example, renovating their house instead of moving to a condo. They have a cottage for the summer and travel a lot over the winter. They see no need to move, thank you very much. Same with their neighhour, they are not going anywhere. So there are 2 prime houses that will not be on the market for quite some time. And heck, I might just inheirit the house, further keeping it off the market. Commissions and land transfer taxes do not factor into it at all. Heck, they just spent over $100,000 on renos, money is not an object.

The tighter mortgage rules, and the continued escalation of house prices despite the best efforts of Ottawa to cool Toronto’s housing market, is playing out in another way, according to TREB figures also released Wednesday.

The number of condos rented through the MLS system in the first three quarters of 2013 was up 25% compared to the same end-of-September period in 2012.

And demand remains so fierce for condo leasing that rents continue to escalate, despite a 21% increase in the number of units listed for rent during the first three quarters of 2013 over the same period a year ago.

One-bedroom suites rented through the MLS system were up almost 30% as of the end of September, and rents escalated 1.8% to an average of $1,633, reports TREB.

Two-bedroom demand was up 20% and rents up 3.6%, to an average of $2,173 a month at the end of September.

The demand for three-bedroom units remained soft, with rentals up just 3.6% and rents actually down almost 2%, to an average of $2,610 per month as of Q3 2013.

Comment: Sure, because most people who need 3 bedrooms would opt for a house. And most 3-bedroom condos are either old and ugly, or new and tiny. Trust me, I sold a 3-bedroom unit in Scarborough a few years back that was 700sf. Yeah… the rooms were TINY.

Some 80% of the rentals were in the City of Toronto.

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Contact Laurin Jeffrey for more information – 416-388-1960

Laurin Jeffrey is a Toronto Realtor with Century 21 Regal Realty. He did not
write these articles, he just reproduces them here for people who are
interested in Toronto real estate. He does not work for any builders.
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