Price of homes shows no signs of slowing, with the average selling price hitting $546,303 in August, up 8.9% from last year.

Susan Pigg – Toronto Star

Toronto realtor John Pasalis spent the day after Labour Day in the full throes of what’s already looking to be a busy fall market.

He was juggling two clients keen to get into the Toronto market before they were priced out for good. One, a couple, lost out on a small semi in the St. Clair and Birchmount Aves. area that went for $73,000 over the $379,900 asking price in an 14-person bidding frenzy where buyers and their agents’ cars lined the street.

The second buyer emerged victorious, but at a price: He paid well over the $699,000 asking price for a gracious detached home in the Coxwell Ave. and Mortimer Ave. area. That far more subdued, eight-person bidding war played out at the listing agent’s east-end office.

“We were swamped all summer with new buyers jumping into the market, looking early in preparation for the fall market,” says Pasalis. “I think it’s going to be busy. There’s just way more people looking than there are houses available.”

Comment: After a brief surge in listings in June, we are back to declining supply. While demand remains steady, or increases. August was pretty calm, but as usual, the switch flips in the first week of September and we are back to the crazy times.

While Toronto’s housing market went into full summer slowdown in August after an unusually hot July for sales, prices continued their skyward climb, fuelled in large part by a lack of enough properties for sale to meet demand.

“Inventory has definitely picked up, even through the first week of the fall market,” says Toronto realtor David Fleming, “but it’s not the (level of) increase we had been expecting.

Comment: David, I like you and all, but listings are not up. Listings fell 3.7% in the 416 in August. They had risen in June and July, but that was it, we are back to falling stock numbers.

“We’re all looking for reasons why.”

Comment: No we aren’t. I know exactly why listings are low. Mostly it is in freehold properties, houses. It is simply too damn expensive to move. Take the average semi in Toronto, priced at $672,725. To sell that, you would pay at least 3.5% in commissions, maybe 4% (no one pays 5% anymore, trust me). Even at 3.5%, that is $23,545.38. Add to that HST of $3,060.90 and legal fees of $1,500 (plus HST). How much are movers? At least $2,000 for a decent sized house. That is a little over $30,000 to sell. Now, to buy the average detached, priced at $921,127 there will be land transfer taxes of $29,045.08. And legal fees of $1,800 (more to buy than sell) which is $2,034 with HST. Few hundred more to move utilities and set up accounts. Never mind any mortgage insurance premium if they don’t have 20% down – you have to pay the tax on that up front, it does not go into the mortgage. So there is another $32k or so to buy. That means a good $62,000 is sucked out of these peoples’ pockets just to buy and sell. Not part of their down payment, just money that is basically thrown away. It is hard for people to justify that… And if they want 20% down on the new house, that is another $184,225.40 they need to have on hand. Almost $250,000 is required to make this move. Cash… on hand… liquid and ready to spend. That, my friend, is why there are so few listings.

Transactions were up just 2.8% in August over a year earlier with 7,391 sales of homes and condos across the GTA, according to figures released Thursday by the Toronto Real Estate Board.

Prices, however, showed no signs of slowing. The average selling price, which includes condos and all house types, was $546,303 in August, up 8.9% from August of 2013.

Comment: And that is with relatively low sales volume and an increase in listings in June and July. Imagine what happens now, in the fall market, with dropping listings and increasing demand.

Even the average sale price of detached homes in the sought-after 416 region, which had been slipping since hitting a high of virtually $1 million in spring, crept back up to an average transaction price in August of $902,428.

Comment: And it will rise in the spring. That is how the market works, prices peak in the Spring and again in the Fall, though usually at a lower amount. Next April or May we might see an average over $1 million. Or very very close to it.

Condo sales were up 6.5% in August, year over year, outpacing sales growth of all other housing types – from detached to semis and townhomes – as buyers looked for alternatives to houses for fear of being priced out of the market for good.

Comment: Yeah… look at that condo market collapse…

Demand is now so strong, especially for unique condos in prime buildings, that Fleming fears this fall, buyers could see the same price drivers that have become commonplace in the hot house market: Realtors holding back accepting offers for a week to create a frenzy of competition that drives bidding wars and prices skyward.

“The demand out there is rampant. I’ve got 24 active buyers right now,” says Fleming. “Right across the board, there is no one person I’m emailing with an incredible number of listings.”

Comment: No kidding. There just aren’t enough to send. Heck, I am trying to help someone with a rental, and everything is gone literally the day it lists. This is nuts!

Condo sales were up 6.3% in the City of Toronto and 6.9% in the 905 regions in August, according to the TREB figures.

The average transaction price for condos hit $370,899 in Toronto, up 4.1% year-over-year, while it was up 5.4% in the 905 regions to an average price of $307,148.

Detached home sales were up just 0.7% across the GTA, 1.7% in the City of Toronto and 0.4% in the 905 regions, likely due to the lack of supply as homeowners simply opt to stay put out of fear of the stress, costs and difficulty of finding another home.

The average sales price in the 905 regions was $644,120 for a detached home, up 9.3%, compared to the average sales price of $902,428 in the 416 region, up 14.7%.

Semi-detached home sales climbed 7.4% in the 416 region and 2.5% in the 905. That brought the average sales price to $627,725 in the 416 region, up 8.8%, and to $445,577 in the 905 regions, up 8.9%.

Townhome sales climbed 11.8% in the 416 and 1.3% in the 905. Prices hit an average of $463,798 in the 416 and $406,748 in the 905, up from last August by 11.7% and 8.5% respectively.

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

Laurin Jeffrey is a Toronto real estate agent 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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