Toronto Real Estate Free Report and Key Takeaways from 2016 First Half Sales
Toronto Real Estate Board (TREB) recently tweeted quoting its president, Larry Cerqua, about the unprecedented growth in demand for residential properties in Greater Toronto area this June. TREB’s MLS system registered as many as 12,794 residential transactions in June 2016, which is a straight 7.5 percent increase than the 11,905 real property sales reported this time last year. Also, the number of new listings went down by 3.8 percent. What are the positive things about the Toronto real property market to look at? Here’s an analysis of a free home report for you.
Inflation, in a nutshell, is often defined as increased prices on a diverse line of goods. As prices rise, economics believe this rise is the effect, rather than the cause. Inflation is the devaluation of currency, which generally occurs after more currency is forced into the economy. Picture having $100 to purchase goods that cost a dollar each, when suddenly, those same items become $2 each.
The strong price growth is believed to be straightway proportional to the drop of new listings. Additionally, the TREB informed us that the average selling price for all sorts of residential properties in Toronto went up by 16.8 percent to reach a $746,546 median price. It seems that the completely detached, semi-detached and townhouse market homes have actually led the price growth in the Toronto housing market.
The TREB report also reveals that most of the GTA home owners are growingly looking for stacked townhouses, traditional row houses, duplexes, small houses and courtyard row houses. This is the biggest reason why the market becomes all the more competitive for the buyers every single day. Jason Mercer, TERB’s Director of Market Analysis, said that the “strong competition between buyers” is due to the “supply remains constrained.”
Sales figures for the condo market have been more or less a straight line through the first half of 2016. 12,800 units of condos were sold in Greater Toronto area in the 2016 first half itself. Now, if you look at it closely and if you have been studying Toronto condo prices for more than year now, you don’t need to be a mortgage professional figure out that it’s actually 7.5 percent higher than the total number of condos sold in the first half of 2015.
Condo sales in downtown Toronto moved up by 30 percent compared to June last year. Humber Bay Shores’ condo sales went up by 18 percent. Compare these to the steep drop in actual listings for condos (26 percent drop in downtown Toronto and 68 percent drop in Humber Bay Shores) and you could find that nearly all new constructions have been absorbed already into the GTA real property market. Moving forward, we may see slower sales and soaring Toronto condo prices.
Housing, in general, is viewed as a positive asset in terms of inflation. This reasoning occurs because the price of a home is a leveraged asset. Buying real estate means that you are making a down payment of approximately 20 percent of the home. If the price of the house rises, which is economically expected over time, then it’s positive because the down payment has been set in stone.
The Toronto Sun published a special report in mid-July this year, which claimed that average Canadian homes will become costlier by 12.4 percent in the second half of 2016 and current market prices of grounded homes and condos very much resonate with the reasonable assumptions of the Toronto Star. However, the leading daily did not actually put forward its own market outlook; rather the market forecast was based on the Royal LePage reports from ray azar. Britain’s grand exit from the UK, also known as Brexit, is believed to have prevented central bankers in Canada from increasing their interest rates. This has successfully prevented the market from ‘cooling down,’ among many other reasons.
Now, if we look back in time, we could find that ratio of sales and listings in GTA real property market was 69.9 percent back in February this year (with 7,621 sales compared to 10,902 listings). The same ratio was 49.5% in February last year. In February 2014, the ratio was 2014. What happened to Toronto real property market this year? Why is it that the property prices are going up with each day passing?
There are certain moderating factors and cyclical effects that may arise. For example, supply and demand influences prices and overall, interest rates increase with inflation. Mortgage rates also reflect interest rates. As such, if the to an extensive level, then people will stop taking out home loans. If demand increases, prices will drop. A continuation of inflation injures the economy, specifically within seniors.
Finally, timing is also another important factor within inflation. Every situation is different, which can mean more complexity, more factors, and more problems predicting inflation. When one tries to guess the influx of government spending on a limited timeline, issues of money and treasury are complicated to say the least. There are always certain actions that can occur in order to keep items in check.
When rates increase beyond a certain level, everyone is affected. Landlord must raise their rents to keep up with the market and lenders will follow suit. As such, landlords increase rents to follow inflation, these higher rents lead to higher prices and this income-producing business makes higher rents increase a home’s value.
To put it bluntly, interest rates have not gone up in months, foreign ownership is not restricted, and CMHS has not yet set an ‘overall minimum down payment.’ As a result, the market continues on its sunny way. If you are reading this free home report and still wondering whether you should buy homes in GTA, well it’s time you should find a good realtor and buy some sort of property before the prices hit a new high.