2018 | What The Heck Happened Last Year?!
2018 is officially behind us & as we look back at the past year, there were some pretty interesting new trends that emerged throughout Toronto!
If we take a look at the 2018 year-end numbers from TREB, there were 77,426 residential transactions throughout the Greater Toronto Area which breaks down to roughly 212 deals PER DAY!
While condos were responsible for a large proportion of sales in the City of Toronto (experienced 7.8% appreciation over 2017) the average sale price for 2018 was down 4.3% to $787,300.
The first half of the year saw less sales as a result of the new mortgage stress test that was implemented, leaving many prospective buyers on the sidelines as they had to rethink their housing options.
Even though we have seen a steady return back to more normal market conditions in the 2nd half of the year, the biggest issue that confronts many buyers is the general lack of inventory available, which is reflected in the stats below.
Sales DECREASED by 22.5%
New Listings DECREASED by 31.5%
Active Listings DECREASED by 11.6%
Average Price INCREASED by 2.1%
Average Days on Market INCREASED by 14.8%
This drastic decrease in new & active listings has been felt most by condo buyers who continue to see very little inventory come on the market & I think there are several reasons for this.
The first trend that I have seen is that existing condo owners just aren’t moving like they used to!
Traditionally, most buyers would purchase their first home (typically a condo), live there for 3-5 years and then move up to something bigger (larger condo or go to a townhouse/semi/etc.) where they would stay for another 5-10 years before moving once again to a bigger unit.
The problem many existing condo owner’s face is that the available options to move up just aren’t there anymore! And if they do find something, more often than not, the price is above what they would feel comfortable paying (or even qualify for!)
As a result of this, we have less resale inventory available (particularly for entry-level condos), pushing many buyers to the new construction sector.
The knock-on effect here is that these new construction projects have increased their prices following this surge in demand, making it even harder for first-time buyers to enter the market with affordable housing.
The second trend that I have seen is many existing condo owner’s are choosing to rent their property out instead of selling it when they do purchase another property.
With prices steadily rising over the past several years, it has become easier to cover the full mortgage cost + maintenance fees that landlords face with the rental income they can bring in.
The third trend that I have seen is an increasing amount of domestic & foreign investors choose new construction condos as their primary investment target.
It makes sense when you look at everything we have talked about above & why an investor would be interested in putting their funds in this kind of market.
High Rental Values + Large Year-over-Year Appreciation = Ideal Investment
While it’s impossible to say what is going to happen in 2019, I have a feeling we are going to see a bit of relief in the condo market with numerous new construction projects finishing development this year!
What do you think is going to happen this year?
Let me know in the comments section below :)
Rylie C aka the OneWheel Realtor