When we look at what’s happened to prices in the last year and what’s expected to happen this year, the cost of waiting to buy is huge. How huge? It’s about $300 a day on average.
You read that right.
Three hundred dollars per day.
Let’s take a look at how much it costs for each of the major housing types.
Putting off buying a detached house? Make sure you save $537 a day. Just skip a coffee or two.
The average price for a detached home in Toronto last January was about $1.17M. Last month it was $1.37M. That means the average price increased by almost $200K in one year. Divide that by 365 days and it means every day it went up by about $537 dollars. If you’re waiting to buy a detached house, just make sure you skip a couple of extravagances so that you can put that five hundred dollars or so in the bank for when you do buy.
If you waited to buy a semi-detached or townhouse it only cost about $10 grand.
The story for semi-detached houses and townhouses is much better for those who waited. A semi cost about $990K last January (2019) and is up to $1M as of last month. That’s only around a 1% increase of about $10K over the year. Townhouses were very similar, with the average cost of $975K a year ago going up about 1% to about $985K. Again, around $10K more expensive than a year earlier. That’s only about $30 a day, which actually seems reasonable given what is happening with detached homes and condos.
People who watched the condo market instead of jumping in paid $242 a day for that privilege.
Finally, for condo apartments, the last year saw a 15% appreciation in the average sale price. Last year in January it cost about $590K on average to buy a condo apartment and last month it cost about $680K. That’s about $90K more over the course of the year, which works out to $242 a day. Again, it’s hard to save more than that every day, which means that buyers for condos are in markedly worse shape today compared to last year at this time.
As any good investment advisor will tell you, past performance is no indicator of future performance. So, if knowing what it cost to sit on the sidelines last year doesn’t convince you that this year will be the same, we can also look at it from the perspective of what we’re predicting for prices this year.
The Toronto Real Estate Board held their Market Year in Review event on February 6th and we were in attendance. As you can imagine, TREB holds lots of information about the market in their MLS system and they make every effort to analyze that data for use by Realtors.
The prediction for 2020 is for a marked increase in prices across the board, with all housing types predicted to hit more than double digit increases. That means at least 10% higher prices by the end of the year. Jason Mercer, TREB’s Director of Market Analysis, made a specific point that detached homes will likely be much more than 10% given the current supply levels and the increasing demand we are seeing.
What’s that look like this year if we use that 10% figure across the board?
- Detached homes cost $375 more every day
- Semi-detached homes cost $275 more every day
- Townhouses cost $270 more every day
- Condos cost $186 more every day
Any way you slice it, it’s expensive to wait to buy a home in Toronto. If you’re interested in getting into the housing market or moving up the property ladder, get in touch with us ASAP. If 2020 plays out as expected, you’ll feel very good about that decision by this time next year.