9 things about the GTA real estate market in 2015 and what it might mean for landlords, buyers and sellers in 2016

Last month, TREB published a 73- page annual Market Year in Review & Outlook Report for 2015, I know most of you would not be interested in reading the whole thing so let me summarize the some less well-known facts in here:

(In case you are not familiar with the real estate acronym, TREB is the Toronto real estate board that most of GTA’s Realtors belongs to. One of TREB’s functions is to run the TORONTO MLS system.)

#1 - TREB’s prediction of the 2016 market in Toronto:

Home ownership demand will remain strong in 2016, with TREB MLS® home sales amounting to between 96,500 and 105,000. (Note: there were 101,299 home sales reported through TREB’s MLS® System in calendar year 2015)

The average selling price in 2016 will range between $655,000 and $665,000. In 2015, the average home prices in the GTA was $622,217.

What it means for buyers and sellers: it will still be a seller’s market, however, price growth might be slower than the previous years.  

#2 - In 2015, when 101,299 home sales were reported, while the GTA population grew by approximately 100,000 people (more than 35,000 households).  

What it means for sellers: you might be able to receive more offers, sooner if your home is newcomer-friendly.

#3 - In Toronto, condominium account for almost 47% of transactions, a decade ago it was 37%. In the region surrounding Toronto, low-rise home types still dominated sales. The share of transactions accounted for by detached houses, semi- detached houses and townhomes combined was at 88% in 2015.

What it means for buyers and sellers: when reading about monthly/ quarterly/ annual average home prices, keep in mind that the average home price might seem low in Toronto compared to the surrounding area but it doesn’t mean that a similar home will be cheaper in Toronto.

#4 - 81% of home buyers who purchased a home in 2015 purchased in a city which they have previously lived in.

What it means for sellers: the future buyer of your home is likely to be from the same area as your house, therefore promoting your house listing locally within the neighborhood is very important. Having a “for sale” sign on your lawn and or having an open house will definitely help to sell your home.

#5 - First time- homebuyers accounted for 53% of GTA home purchases, in the City of Toronto, the first time home buyers share of 2015 transactions was almost 60 percent, the GTA average was 47%.

On average, GTA homeowners has been living in their current dwelling for 10 years. Those aged between 18 to 34 has been in their current home for an average of 4 years while those older than 55 years of age have been in the current home for an average of 19 years.

What it means for landlords and sellers: the younger generation is the driving forces of the market. Most first time home buyer are young adults and those aged between 18 to 34 move more often than older adults. Making smart update to your property will attracts more buyers or tenants.

 

#6 - As of December 2015, the MLS®HPI Composite benchmark price was $573,500 and ranged between $721,000 in York Region to $406,800 in Durham Region. The MLS benchmark price growth for detached and attached houses was 11% and townhouses was 10%. In contrast, the annual growth rate of condominium apartments was 4.7%. (The growth of 4.7% is still more than double the inflation).

What it means for buyers: if this trend continues, your best bet for property value appreciation is to buy a low-rise single-family home. Condominium appreciates in value slower but it is still a solid investment if you take into account the better ROI on rental income.

#7 - Over the past year, the strong uptick in condo unit completions result in an increased number of listings on the TREB MLS system, however the increase in listing was met by an increase in sale as well, so much that the inventory level actually trended lower over last year.

What it means for condo buyers / sellers: Don’t worry or be over-excited about the amount of newly completed condo units entering the market, the demand should meet the new increased supply so the market will remain balance.

#8 - Ipsos survey suggests home ownership demands remains strong. A survey conducted by Ipsos in November 2015 found that 12% of GTA households said they were very likely to purchase a home over the next year. The share of very likely buyers in Toronto is higher at 14%, where the surrounding regions where the share was 11%.

What it means for buyers and sellers: bidding wars are here to stay.

#9- The federal mortgage policy change that was announced on December 11, 2015 did not affect most buyers as small down payments were not that common anyway. According to the Ipsos survey, for properties that sold for more than $500,000 and less than $700,000, only 6% of buyers had a down payment between 5 and 9.9%. For properties that sold between $700,000 and 1 mil, an even smaller share of buyers (3%) put down between 5 and 9.9%.

[On December 11 of 2015, the federal government changed its policy with regard to eligibility for new government-backed insured mortgages that as of February 15, 2016, the minimum down payment for new insured mortgages will increase from 5% to 10% for the portion of the house price greater than $500,000 and less than $1,000,000.] 

What it means for buyers and sellers: if you are selling a home between $500,000 and $700,000, you might want to get a head start and sell before February 15. However, if you are looking to buy a home between $500,000 and $700,000 you might be better off waiting until after February 15.

Don't hesitate to contact me if there is anything about real estate in the GTA that you might want to know!

Janis Tsang

Janis Tsang

Sales Representative
CENTURY 21 Atria Realty Inc., Brokerage*
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