Sung Woo

Market Report - March/April 2018

19 March 2018
Sung Woo

The Toronto Real Estate Board reported February sales were down 35% from February of last year. Get use to it: we will be reporting the same story for at least the next couple of months. However, what the media seems to focus on is the decline in average prices - that’s the average price of all sales on TREB and it is down by 12% from February of 2017. But average price is dependent on the ‘mix’ of sales. If more smaller properties are selling, even if their prices are rising, then the average price will fall. That leads us to a discussion of the condo market.

All condo sales on TREB were down by 30% this February over February of last year but in the Downtown market, February sales were 32% lower than in 2017; 23% lower than in 2016; and 9% higher than in 2015. In Humber Bay, the February sales were down only 15% from 2017; 11% lower than 2016; and 4% higher than in 2015. Remember that 2015 is the year that most resembles 2018 in terms of our sales forecasts.

But the price story can be traced to listings. In a normal market ‘new’ listings in a month should be 33% to 50% of ‘active’ listings. In the Downtown condo market for February of 2018, ‘new‘ listings were 105% of ‘active’ listings. In 2017, the number was 144%; in 2016 it was 72%; and in 2015 it was 60%. In February of 2018 we had only 601 ‘new’ listings in the Downtown condo market. Compare that to 685 in 2017; 948 in 2016; and 1762 in 2015 (when the experts said a price crash was coming). That explains why condo prices have risen almost $200/sf in the last twelve months.

You would think that rising prices would lead to increased sales. That’s what economists tell you. But, the reality for real estate is that people will not move/sell if they have no place to go! For owners, the double land transfer tax makes staying put and renovating more attractive. For Investors, they are having difficulty in selling units that are tenanted, and rent controls make it worse.

As already mentioned, Downtown condo prices have increased about $200/sf over the last twelve months – that’s over 20%. We believe that type of increase is unsustainable over the long term. Annual sustainable price increases should be in the 3-4% range. So, don’t expect prices to decline but do expect a flattening.

This chart compares new listings during the month of February to Active listings at the end of February for the past four years. In a normal market, ‘new’ listings in a month should be 33% to 50% of ‘active’ listings.
Source: Toronto Real Estate Board

Can You Believe How Few Sales Most Agents Do?

30 January 2017
Sung Woo

When the public tries to negotiate the commission down or tries to get a buyer rebate, their assumption is that all agents are the same. If all Agents were the same, then picking the agent who agreed to your request would net you the most money, but they are not!

Did you know in 2016, there were 48,000 agents in the Toronto Real Estate Board?

Did you know almost 13,000 agents did not do even a single sales end? And, there are two sales ends to ever sale, a list end and a buyer end.

Did you know 25,000 agents, or over half the members of the Toronto Real Estate Board, did two sale ends or less in 2016?

These are the agents that will offer you the type of deals you're looking for. Who do you want to represent your interests when buying or selling a property in Toronto? Do you really want someone who offers to save you a couple thousand dollars but only works part time?