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2016 brought some of the most dramatic increases in home ownership costs in recent history. The fourth quarter of 2016 in particular saw an increase in condo sales by 22.3% and a decrease in new listings by 13.4% compared to last year.
What this means is that despite the increase in sales over last year, supply remains constrained by the almost 15% reduction in condo listings. Pre-construction developers can barely keep up with the demand as most projects with occupancy dates in 2017 and 2018 are already sold out.
The average condo price in the Toronto region saw a 14.5% increase over last year’s figures. This was also the first year where over-asking sale prices for condos became a thing. The average sale to list price in the Toronto and Mississauga market were at 99% or 100%
Condos on average were also spending less time on the market. With same day sales becoming a reality for many home owners. In the fourth quarter of 2015, the average home would spend 33 days on the market before it sold. In 2016 this number has gone down to 23 days on the market.
The average detached home in Toronto now sells for about $1.4 Million, a staggering 27% increase over last years figures. The average detached home in Mississauga sells for about $750,000.
All low-rise home segments saw over 100% sale to list price ratio, meaning multiple offers and high competition are the new norm.
With no sign of prices slowing down, condos have become an attractive option for first time home buyers, many of which can no longer afford single family low-rise homes. While detached and semi-detached homes saw the highest price increases, condos saw a more controlled growth at a modest 15%.
Forecasts have marked 2017 as a year of similar growth, with expected condo price increases of 10-12%.
Competition between renters increase in 2016. The number of condos listed for rent was down almost 15%. Average days on market
The number of condominium apartments listed for rent in the fourth quarter of 2016 was down substantially (-14.2 per cent) compared to Q4 2015. This lack of inventory was at the root of the dip on rental transactions (-5.8 per cent).
The average one-bedroom rent for the TREB market area as a whole was up by 7.4 per cent on a year-over-year basis to $1,776. The average two- bedroom rent was up by 8.0 per cent to $2,415.
Given these trends, many buyers are now purchasing condos with the intent to rent them out as a short term investment, and then sell them down the line in a couple of years.
If you take away anything from this article it should be the following:
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