Understanding TREB’s May 2016 Sales Numbers
This past week the Toronto Real Estate Board released the May 2016 homes sales charts.
As expected, Toronto home resale prices are continuing their climb, and along with the highest number of sales for the month of May ever recorded coupled with an unusual lower number of homes being listed for resale. This upward pressure on home prices is expected to continue through the year.
Resale of all home types across the Greater Toronto Area (May 2016 Averages)
• City of Toronto (“416”) Sales: 4,638; Average price: $782,051; New Listings: 6,772
o Yr./Yr. % Change: 8.9%
• Rest of GTA (“905”) Sales: 8,232; Average price: $734,924; New Listings: 10,640
o Yr./Yr. % Change: 12.8%
Resale detached homes across the Greater Toronto Area (May 2016 Averages)
• City of Toronto (“416”) Detached sales: 1,565; Average price: $1,285,693
o Yr./Yr. % Change: 15.2%
• Rest of GTA (“905”) Detached sales: 4,935; Average price: $891,870
o Yr./Yr. % Change: 21.2%
Resale condominium apartments across the Greater Toronto Area (May 2016 Averages)
• City of Toronto (“416”) Condo sales: 2,137; Average price: $ 442,520
o Yr./Yr. % Change: 5.0%
• Rest of GTA (“905”) Condo sales: 919; Average price: $ 347,431
o Yr./Yr. % Change: 8.7%
The numbers, however, do not tell the whole story of home prices in Toronto.
Beyond the Numbers
Realtors expect seasonal variances in the number of homes sold and changes to reported home sale prices. The average sales numbers do not show the types of houses most in demand, shortage of listings in the types of houses that cannot be bought and the competition that pushes the final selling price higher by eager buyers for houses that are on the market.
(For a seasonal comparison see the charts for January 2016 reported sales here: TREB January 2016 Monthly Resale Housing Figures)
Investing Smart in Toronto’s Real Estate
Smart investors understand that averages only speak to the median price point: 50% sold under and 50% sold over the average prices reported.
When investing in real estate historical figures can give you a starting point of where to look but do not indicate future returns. To find the properties with the best probable return on investment you need to look at the outside forces that come into play:
• Location and neighbourhood amenities
• Lifestyle requirements of residents
• Future growth of the area including residential, commercial, transportation, retail, etc.
My investor clients also know that in the pre-construction home market the sale prices and returns received are not generally reported. Many of these investments are sold on assignment, before the investor takes possession and sells their property to a new buyer before closing. Or that the investor that holds onto the property for the first couple of years to maximize the ROI as the neighbourhood grows, bringing higher than average returns when it is time to sell and earning rental income along the way.
A three bedroom condo unit may show as a better investment prospect depending on a multitude of factors including:
• Location and types of schools in the area
• Availability of parking and public transportation
• Family-friendly conveniences such as parks, shopping, restaurants
A one bedroom condo purchaser may not care about parking and schools and put a higher priority on public transportation and access to restaurants, for example.
Different units attract different purchasers, according to lifestyle requirements. Knowing your eventual purchaser profile will help you greatly to choose the right investment unit and maximize your return.
Creating an Investment Profile
We know overall that property is a great investment that offers excellent long-term returns. By choosing your property carefully, you can earn above average returns in just a few years.
Seeking the highest possible returns should be tempered by your investment risk attitude, finding suitable properties on the market and a positive outlook in the real estate market in the area you invest.
I have some new projects coming over the next few months (sorry, I can’t yet confirm sale dates or project details) but I am always looking for your best real estate investment opportunities in Toronto and area.
I have helped hundreds of clients reach their goals and look forward to personally speaking with you to help you develop your investment profile. Simply give me a call on my personal phone number 416-737-7489.