Toronto Residential Income Property Blog

Monthly Newsletter: December 2007 (go to www.plex.ca for graphs)

As we approach the holidays, I’d like to take a look at what has been happening in the Toronto real estate market this year. Next month I’ll do my yearly wrap-up of income property sales by region and price, but for now I want to share some macro YTD sales statistics as provided by the Toronto Real Estate Board.

The Toronto Real Estate Board reported a record breaking 7,915 sales of single family homes in October 2007. This represents a 15 percent increase over the sales volume reported for September and a 15 percent increase over the sales volume reported for October 2006. This has helped fuel our best sales year ever.

This chart graphically depicts the number of single family homes sold in the years 1980 through to 2006. The volume of sales in the Toronto area experienced peaks in 1986 and 1988 followed by slow years during the early 1990's. Sales volume picked up from 1996 onwards. Sales of resale homes in 2005 were the highest recorded, although 2007 have already surpassed that.

This chart presents average price trends for houses in the Toronto area during the last 26 years. House prices clearly peaked in 1989 and then dropped until 1996. House prices have been steadily increasing during the last few years although not at the dramatic rates seen during the late 1980s. The average price reported for 2006 was 29 percent higher than the previous peak in 1989.

The average selling price so far for 2007 is $373,998 - approximately 6 percent higher than the average selling price for 2006 of $351,941.
There are certain neighbourhoods where prices have gone up even more dramatically. In Riverdale, where I live, in some cases prices have gone up over 40%. A semi-detached that may have traded for $350K five years ago could sell today for over $500K. This is the case for income properties too – that is why there are so many sales that don’t make sense insofar as the returns go. Duplexes and triplexes in good condition on marquee streets tend to be priced more on comparable sales than on the numbers. Since you can see overall sales still trending upward, it is difficult to say exactly when prices may stabilize such that the bottom line returns start to be more competitive again with other types of investments.

Next month we’ll see how the above market activity has been specifically reflected in the Toronto income property market. To all my friends and clients, I’d like to wish you and your family a very merry X-mas and happy holidays.

P.A.