From the Desk of Faisal - Real Estate News for the Week of Nov 12th - Nov 18th

Welcome to Properties Ontario’s weekly update. Our team goes through numerous articles and summarize them for you! Please do not hesitate to contact me if there are any topics you would like to discuss further. If you have any questions about buying, selling, or leasing residential or commercial space, we’re the team for you. For current listings in the marketplace, check out our website www.propertiesontario.com 

GTA Commercial Statistics October 2018

Commercial realtors reported 2,331,390 square feet of total leased space through the multiple listing services. The total square footage encompasses office space, industrial, and commercial/retail space. This was 29.2% higher than October 2017 for the month of October 2018. The industrial sector accounted for 73% of the total square feet leased. The average industrial lease rate was $10.09 which is up from $8.24 in October 2017. However, average commercial/retail lease rate fell 1.1% and office space lease rate fell 3.8%.

OECD Countries Report

An analysis done by Homes.com of OECD countries ranked Canada well behind Mexico and the United States in terms of affordability. In Canada a home buyer can purchase 271.1 square feet of home based on the median household income of $30,000. In the US, their median household income of $44,000 allows home buyers 669.4 square feet. Furthermore, Mexico allows for purchase of 462.5 square feet with a median income of $14,000. Turkey topped the list by allowing home buyers 743 square feet due to their median household income being $17,000. The least affordable country was South Korea (84.4 square feet) and Switzerland (112.9 square feet). This study was determined by using a median salary multiplier of 3.

GTA Detached Housing Statistics October 2018

GTA October 2018 (October 2017 comparison in brackets)

• Benchmark Price: $914,500 (-0.73%)
  
  • Smallest drop since January 2018
• Median Price: $850,000 (+1.19%)
• Average Price: $1,019,416 (+1%)
• Number of Sales: 3,328 (+7.1%)
  
  • Keep in mind October 2017 was a horrible month for detached
  • Sales still 25% below 2016 and 8.25% below 10 year average
• New Listings: 7,606 (-3%)
• Sales to New Listings: 43.75
  
  • Balanced market, leaning towards buyer’s market
• Active Listings: 11,473 (+4.26%)
• Months of Inventory: 3.45 months if no new listings came on the market

Toronto October 2018 Detached Statistics (October 2017 comparison in brackets)

• Benchmark Price: $1,109,300 (+1.94%)
  
  • Three consecutive months of gains
• Median Price: $1,050,000 (+5%)
  
  • Largely due to sales of $2 million plus homes
• Average Price: $1,311,265 (+1.4%)
• Number of Sales: 882 (+10.1%)
  
  • Keep in mind October 2017 was a horrible month for detached
• New Listings: 1,857 (+5.63%)
• Sales to New Listings: 47.50
  
  • Balanced market
• Active Listings: 2,293 (+4.51%)
• Months of Inventory: 2.60 months if no new listings came on the market

Green Building Survey

A survey done by Dodge Data & Analytics found of more than 2,000 building professionals from 86 countries revealed that 47% expect more than 60% of their projects will be green by 2021. In Canada, at least 50% of clients demand green buildings which is 34% higher than the global average. This is due to improved occupant health and wellbeing. The benefits of green building include 8% cost savings in operations in the first year and building appreciation of 7%.

New Townhome Sales Slowing Down

Largely due to sustained price appreciation, new construction townhome segment has slowed down significantly in Canada’s top markets according to Altus Group. In the first half of 2016, 5,329 new townhomes were sold but in the first half of 2018, only 885 new units were sold in Toronto. This makes the market share of new construction townhomes currently at 7%. On the other hand, Vancouver faced declines in the number of new townhomes sold. Although townhomes typically attract single young professionals, middle aged households with children are still purchasing these types of homes. The latter demographic represents the largest portion of homebuyers in Canada.

Teranet Home Price Index (HPI)

Teranet is a private land registry behemoth who have partnered with National Bank to produce a Home Pricing Index (HPI). The key difference between Teranet HPI and the Canadian Real Estate Association (CREA) HPI is that Teranet measures when the sale is closed or transferred. CREA measures at the point of sale through their multiple listing services. Therefore, it does not take to account deals that may have fallen through. The Teranet HPI C11 measures Canada’s 11 largest markets. This index fell month over month in October by 0.38%. However, the index increased annually by 2.81% compared to October 2017. The Toronto index fell 0.18% monthly but rose 1.88% compared to October 2017. Moreover, the Vancouver index fell 0.83% monthly but also rose by 4.63% annually. The third largest metropolitan, Montreal, had its index increase 0.22% monthly and 5.02% annually, but it is important to keep in mind that the Montreal market trailed the general market over the past few years. For your information, the 11 metros include: Montreal (+0.2%), Victoria (-0.1%), Toronto (-0.2%), Winnipeg (-0.2%), Calgary (-0.3%), Ottawa-Gatineau (0.4%), Edmonton (-0.7%), Vancouver (-0.8%), Quebec City (-1.0%), and Halifax (-1.0%). When looking in more details on housing types, condo prices grew close to 6% annually while non-condo prices stayed flat or fell year over year.

Canadian Real Estate Association (CREA) October Statistics

CREA reported a 1.6% decline from September to October 2018. On an annual basis, the decline was 3.7%. These figures are not seasonally adjusted and are actual figures. New listings fell 1.1% monthly, led by the GTA, Calgary, and Vancouver. Currently, there is 5.3 months of inventory remaining across Canada if no new listings came on the market. The CREA home price index (HPI) was up 2.3% annually in October 2018 but the national average sale price fell by 1.5% year over year.

Multi-Family Housing Analysis

Marcus and Millichap produced a report titled “The Toronto Multifamily Spotlight” for November 2018. In the report, they estimated 43,500 households will be formed over the next 18 months largely due to an influx of skilled talent and because of the city’s tech centre. Investor demand has pushed average prices up 10% annually to $260,100 per unit or suite. The affordability issue of single-family homes has also contributed to higher demand of rentals. Combining all these factors has caused vacancy rate in Toronto to fall below 1%. During the first three quarters of 2018, we added 2,500 new apartments. This is the highest delivery rate since 1994.