State of the Market: Toronto
Soaring demand and heated bidding wars propelled the Greater Toronto Area real estate market to new heights in 2016. The benchmark price for residential real estate was up 17 per cent year-over-year in the region, and the price of a detached home in the city of Toronto now tops $1.2 million, up over 20 per cent from a year ago
As the performance of the region’s top-tier market continues to eclipse that of other major Canadian cities, we sat down with John Poole, VP Ontario Brokerage and Broker of Record of Sotheby’s International Realty Canada, to discuss the state of the top-tier real estate market heading into fall 2016.
The GTA is the largest real estate market in Canada in terms of both geographic and economic scope. How has the region’s real estate market performed so far this year, particularly in the luxury segment, which has reported unprecedented gains?
The industry expected a healthy market in 2016, but frankly, market performance has exceeded expectations this year.
In the market for real estate over $1 million, the GTA has been leaps and bounds ahead of other Canadian urban centres in year-over-year sales gains – both in percentage increase and total unit sales. To put it into perspective, we saw real estate sales over $1 million jump close to 50 per cent in 2015 over 2014, then, in the first half of this year, we watched as sales volume increased another 65 per cent. That’s more than 10,000 units changing hands over the $1 million mark in six months, with 4,000 of those in the city of Toronto alone.
Though $1 million might not represent the luxury market in many areas of the GTA these days, what we have seen is that as the benchmark price has gone up, it’s been sales of real estate over $4 million that has seen the greatest percentage gains: up over 80 per cent in the first half of the year. It’s been a strong market to say the least.
Several market analysts have sounded alarm bells over Toronto’s condo boom, saying that the volume of new units has pushed the market into high-risk territory. Is that the case in the luxury segment?
Talk of a condo bubble has been around for several years now. To date, what we’ve seen is that the number of condos that are coming onto the market is being absorbed by consumer demand. The top-tier of the condo market has also stayed strong with sales over $1 million up 36 per cent in the first half of the year.
It’s true that the high-end condo market hasn’t been caught up in as strong an upward spiral as the detached single family home market. There’s more choice for buyers, and fewer bidding wars, but over 35 per cent of the condos that sold in the first half of 2016 went for above their listed price. The demand is there.
The question at the top of a lot of people’s minds is whether the challenges faced by the global economy, and downgrades to projected Canadian GDP growth will dampen the GTA real estate market. How do you think the market will respond?
Real estate market performance is usually influenced by more local and immediate influences. Here are the facts: interests rates have been at a historical low for years. Our job market been healthy: the GTA is Canada’s primary economic hub, Toronto’s our financial capital and unemployment is lower this year than last. People continue to move here from other parts of the country, and we are still the top destination for new immigrants in the country. Our low Canadian dollar helps attract foreign buyers and keeps Canadian real estate buyers focused on opportunities in the country. People are confident in our real estate market as a place where they can build wealth.
How is the top-tier GTA market expected to perform this fall?
Last year, the GTA accelerated ahead of all other Canadian cities in terms of year-over- year gains in sales over $1 million – that’s a lead it’s going to retain to the end of 2016.