As we all love to do, I spent the morning reviewing the latest Toronto Real Estate Board sales statistics. I think I speak for everyone when I say that nothing compares to a hot cup of coffee and a detailed review of the index and benchmark prices of real estate on both a monthly and year to date basis.
On the off chance you are one of the very few individuals who doesn’t love that sort of thing, I’ve come up with a simple story about the latest stats. Here it is.
One of the best bets moving forward for real estate in Toronto is townhouses. I say that for three reasons.
- There are fewer being sold.
I know, supply and demand is so 1980s. Still, the fact that there are 3.6% fewer townhouses being sold now than a year ago means that the townhouses that are being sold are in greater demand. In the year to date so far (up to end of October, 2015), there have been about 7,200 freehold townhouses sold. That means that 3.6% fewer works out to about 260 fewer townhouses available for buyers. Which leads me to my next reason.
- The average price is going up.
Yes, the flip side of the lower number on the market and continued demand is that what is being sold is going for more money. A lot more money. The average price for a townhouse in Toronto is up 11.2% compared to a year ago. Considering the average price now is $579K, that means that on average, a townhouse in Toronto costs about $58,000 more than it did a year ago. I know this seems like a great situation if you are looking to sell a townhouse (and it is!) but why does this mean buying a townhouse is a good idea?
- This is likely going to continue.
When we look at what is going on in the other major housing types, we see that townhouses are in a great position.
In a nutshell, this table tells us this about the other housing types:
- A lot fewer (down 9.7%) detached homes are being sold. A result, the average price is up 12.5%. Fewer being sold for a higher price means people look to their next option down on the property ladder, semi-detached houses.
- There are actually more (up 1.9%) semi-detached homes being sold, with the average price up 10.0% as people who can’t find (or afford) a detached home buy a semi-detached. Still, an increase in the number of sales means a more balanced market for this type of house. Expect to see a good number of semi-detached houses continue to come on the market. Prices will rise but at a more moderate level due to decent supply.
- There are a lot more condos being sold (up 9.7%) and the average price has also risen by a healthy but more modest amount (up 4.2%). The number of condos built and coming on market is both increasing the overall sales of condos and moderating the price increase, as buyers have more options. I believe we will see condos have the most modest of increases for Toronto housing types over the next year.
I predict that moving forward we’ll see townhouses do better than any other housing type in Toronto for percentage price increases because:
- They are more affordable than detached homes (the average price in Toronto for a detached home of $1.07M is almost double the average price for a townhouse of $579K) and while there are fewer townhouses being sold, they aren’t as rare as detached homes yet.
- Semi-detached homes will do well but the market appears to be balancing, which means they won’t appreciate as much as townhouses, which are seeing lower number of units being sold.
- Appreciation in condos will be more modest on average as the supply continues to come online and that relative affordability will allow some buyers to consider a townhouse as an alternative, which will help increase townhouse demand and therefore price.
This analysis is supported by my experience with a townhouse in Toronto that I just listed for sale near Bloor and Islington, 248A Bering Avenue.
We are seeing steady bookings for showings and comparable listings have been selling within a week or so at a good but still reasonable premium over list price. It helps that my client has taken excellent care of the home and done a number of useful upgrades like wall to wall built in cabinetry in the kitchen, custom roller shades and built ins around the fireplace.
Take a look at the virtual tour by clicking on the photo of the open concept main floor or visit www.248A.beringavenue.com to see the tour, photos and floorplans. It’s listed at $749,000 and I think it will be a great home and investment.
If you or anyone you know would like to see the property, please get in touch. I’d love to be responsible for what comes next.