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What's next for the Toronto housing market?

JANUARY 30, 2013

What's next for the Toronto housing market?

That will be one of the topics on the agenda on February 21st when I'll be in Toronto giving a free seminar sponsored by the LePoidevin Group.  The full details and online registration form are in the following link:

www.realestate2013.ca

On the agenda:

  • Latest developments in the resale market in major Canadian metros
  • What the Canadian housing boom has meant for the economy and why even the consensus "soft landing" will prove problematic
  • A look at the key trends in the condo and single family housing market in the 416 and 905
  • What a slowdown in the housing market would mean for your investment portfolio.  This part of the seminar will be delivered by David LePoidevin, former VP at Royal Bank and current president at The LePoidevin Group.  David and his team manage nearly $600 million dollars on behalf of their clients and have a long track record of proven results, including recently being named the Canadian broker of the year for having the top risk-adjusted returns in the country.

 

A sneak peak at the latest Toronto housing trends:

Final December resale numbers showed a 19.5% decline in home sales in Toronto:

That said, the January mid-month numbers showed resales essentially flat compared to last year's numbers, a welcome sign for those hoping for a near-term turnaround.  However, with the small sample size and inherent volatility of that data, it's definitely too early to determine whether this indeed marks a return to the "good times" in Toronto.

One of the key trends to watch, and one that I'll be focusing on in the seminar, is the divergergence in the two major market segments in the GTA: Detached homes and condo apartments.  (I know there are other housing types, but these two segments generally account for roughly 75% of resale activity in the GTA).

On this front, it's difficult to miss the weakness in the condo sector, where sales have fallen most significantly amid rising inventory relative to previous years:

 

 

This is more than a bit of a concern heading into 2013 where there will be an expected 25,000 to 28,000 new condo units completing in the city, the majority in the downtown core.

It's difficult at this point to see where the turnaround in the condo sector will come from in the short term.  In fact, when we look at median resale prices for condos in the GTA, we find that they have fallen into negative territory for the first time since 2009:

While the weakness is contained in the condo segment for the time being, the Bank of Canada, in their December FSR report, noted that weakness in the Toronto condo market has the capacity to easily spread to other segments:

"Price corrections in particular segments of the housing market may put downward pressure on house prices more generally"

This is but one of the topics on the agenda.  If housing, the economy, and investing themes interest you, you'll want to reserve your spot.  Seating is limited.

 

Cheers,

Ben

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Ben Rabidoux
By Ben Rabidoux

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10 Comments

  • Dimitri Tishchenko said:
    • 1 year, 2 months

    I really enjoyed watching the video from you Vancouver presentation. I hope they will be posting this one as well.

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  • RE Lurker said:
    • 1 year, 2 months

    I second that. (I was at Vancouver's presentation though, but I wouldn't mind seeing Toronto's.) It would be especially interesting if they included the questions this time.

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  • Ben Rabidoux said:
    • 1 year, 2 months

    To my knowledge, the Toronto presentation will not be taped. Sorry folks.

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  • YM said:
    • 1 year, 2 months

    Hi Ben,

    Thank you for your great commentary - and I really enjoy reading your articles.
    I look forward to seeing you on Feb. 21 ...

    You posted 4 graphs for Condo sales / inventory in 416 / 905.
    Can you please also post the similar 4 graphs for Detached homes sales / inventory in 416 / 905.

    My guess is that the Detached market is healthy and strong and won't suffer from any potential correction due to the lack of supply and high demand for the foreseeable future. It would be good to get your thoughts on that with the graphs.

    - YM

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  • Andrew said:
    • 1 year, 2 months

    There has to be some effect due to substitution. If condo prices correct significantly, it's hard to imagine detached homes would not be affected. If nothing else, current condo owners will find it harder to trade up to detached homes, and new buyers will be tempted into a more affordable condo market.

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  • YM said:
    • 1 year, 2 months

    Yes. I agree.
    It would still be interesting to see the 4 graphs specifically for Detached homes sales / inventory in 416 / 905.
    I wonder why they were left out. Especially given the divergergence in the two major market segments in the GTA: Detached homes and condo apartments.

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  • ham said:
    • 1 year, 2 months

    Where can I find the video from your Van presentation? I love your work but missed the show :(

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  • ham said:
    • 1 year, 2 months

    Where can I find the video from your Van presentation? I love your work but missed the show :(

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  • Andrew F said:
    • 1 year, 2 months

    I reserved a seat!

    Too bad this event won't be recorded and posted to the web. I watched the Vancouver one, and was discussing it with some family members and passed the video along to them. I think they'd be curious to see your presentation on the local market.

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  • Philopator said:
    • 1 year, 1 month

    Would it be possible to upload the slides for online access?

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