The Toronto Real Estate Board’s (TREB) monthly Market Watch report gives us valuable insights into the state of the housing market, including monthly and yearly price increase comparisons, sales numbers and average time spent on the market. When we examine the stats from 2017 and the trends that have continued into 2018, one thing remains clear – condos drove last year’s market in Toronto, and show no signs of slowing down.
Average Toronto real estate prices in 2017 were $834,138, up 12.6 per cent from the year previous. Toronto condos, however, experienced close to double that growth, increasing 23 per cent to reach an average of $545, 826. No other property prices came close to reaching that sort of growth, with detached homes increasing 13.4 per cent to an average price of $1,420,046 and semi-detached and townhomes increasing 15 per cent each to reach $991,138 and $721,884 respectively.
“It’s interesting to note home price growth in the second half of 2017 differed substantially depending on market segment,” says Jason Mercer, TREB’s director of market analysis. “The detached market segment experienced the slowest pace of growth as many buyers looked to less expensive options. Conversely, the condominium apartment segment experienced double-digit growth, as condos accounted for a growing share of transactions.”
After a record-breaking market in the first quarter of 2017, the introduction of the Ontario Fair housing plan cooled the market significantly. Sellers and buyers alike were uncertain what the new rules would bring, and it resulted in inventory being on the market longer, and the frenzy of bidding wars to slow down. Detached houses were hit the hardest, with sales dropping 23.3 per cent, while condos dropped the least at 7.5 per cent. While this might sound alarming, it’s important to remember it isn’t a completely negative or unwanted consequence. Slower sell times means buyers are able to take the time to make decisions mindfully instead of being swept up in a bidding war and purchasing homes outside their budgets.
So why are condos doing so well?
It’s important to remember that the condo market has slowed down as well, just at a much lesser pace than the detached market. But there are several reasons why condos have taken a much lesser hit than the detached market in these slowed conditions. The federal announcement of tighter lending rules starting January 1, 2018 drove buyers to race to purchase before being stress-tested out of the market at the end of 2017. With detached housing prices still relatively high, despite longer times on the market, condos were a viable option for these buyers attempting to avoid the new mortgage rules in 2018. Another part is simply from higher demand due to affordability. Condos offer a realistic option and are a natural first step for new buyers looking to break into the market and stay in the city. This trend has continued into the start of this year, and we’ll likely see similar statistics throughout 2018.
Check out the infographic below to get a better understanding of the fluctuation of different housing types in Toronto and beyond.
This post was created in partnership with Zoocasa.com, a leading real estate resource that combines online search tools and a full-service brokerage to empower Canadians to buy or sell their homes faster, easier and more successfully. Home buyers can browse condos, townhouses and houses for sale in Toronto.