GREATER TORONTO AREA
Residential Unit Sales
Stock market volatility and global economic concerns put the brakes on home-buying activity in the Greater Toronto Area in the second half of 2008. While demand for residential real estate was down from 2007 levels, buyers were in the driver’s seat for the first time in years. By year-end, an estimated 79,000 homes are expected to change hands, the lowest level seen since 2003. This represents a 15 per cent drop from the record-setting 93,193 units that were sold in 2007 when buyers rushed to move ahead of the Toronto Land Transfer tax. Housing values are expected to continue to hold steady with a two percent increase to $384,000 forecast by year-end 2008. While supply was tight with minimal listings for the first half of 2008, inventory levels have increased steadily since July. During the final quarter of the year, supply levels ran about 30 per cent ahead of levels reported one year ago.Well-priced homes in traditional blue chip areas-Leaside, North Toronto, the Beach, John Ross Robertson, Lytton Park, High Park and Bloor West Village-still saw multiple offers, but they were more likely to be around asking range rather than the five and six figure sums over-asking seen in recent years. Choice product from Scarborough to Mississauga continues to sell. The average number of days a home remained on market in 2008 is 41, compared to 31 days in 2007. Sellers achieved 97 per cent of their list price.
Thanks to favourable lending rates, first-time buyers, including those choosing to invest their savings in a tangible asset like a home, continued to play a role in local housing markets in 2008. Many attempted to maximize their buying dollars by looking to semidetached properties in areas in close proximity to downtown such as Birchcliff Village, East York, the Junction, Dovercourt Village, Upper Beach and Leslieville. Young professionals also bought small condominiums in the heart of the downtown core. Demand for luxury properties priced over $1.5 million remained stable, with unit sales down approximately 17 per cent from 2007. Traditional strongholds such as Forest Hill, Hogg’s Hollow, Bridle Path, St. Andrews, and Lawrence Park experienced a noticeable decrease in sales activity, while perennial favourites Rosedale and the Kingsway held steady.
Housing starts were up over last year by 33 per cent with the vast majority of new construction being condominium apartments. With uncertainty around the financial meltdown and the unemployment rate in Toronto forecast to rise, albeit moderately to 7.2 per cent, sales in all price ranges are forecast to further decrease in the first few months of 2009. Also expected to impact the market are builder/speculators of new infill homes representing five-to-ten percent of the market. With buyers clearly having the upper-hand, this group is choosing to sit on the sidelines rather than adjust prices.
Labour market conditions for Toronto will remain tight through 2009. However, the rate of job growth remains above average for Ontario and is still on the plus side at one per cent. Additionally, Toronto’s $1.6 billion capital budget for infrastructure investment will facilitate spending while the softening Canadian dollar should have a positive impact on the area’s film industry. Population in the GTA is also expected to grow through migration by approximately 60,000 households.
In 2009, quality and pricing will continue to play a huge factor in the Toronto real estate market. Sellers will need to make the necessary adjustments and price their homes accordingly if they intend to move. The average number of days a listing will be on market is expected to increase. This is due in part to greater supply and potential upper-end and move up buyers with money in the financial markets choosing to sit on the fence while the stock markets sort themselves out.
The market for 2009 will continue to favour buyers. Inventory levels are expected to increase over 2008 levels and the number of homes due to change hands is expected to moderate by five per cent to 75,000 units. The average selling price is forecast to decline by two per cent to $376,000.