Demand is high, but few buyers can afford Toronto real estate. Those who can buy are buying quickly, and paying above the seller’s asking price.”
August brought “no surprises” for the Greater Toronto Area’s residential real estate market, according to a new report from Chestnut Park Real Estate Ltd. Brokerage.
Homebuyer hopefuls were still in the grips of interest rates last month, says the brokerage, and the challenging financial circumstances resulted in just 5,294 properties changing hands. Though that figure edged up from 5,245 sales recorded in July, it was 5.2% below the 5,584 sales recorded in August 2022.
“Declines in sales volume were particularly noticeable in the case of detached and semi-detached properties,” writes Chestnut Park President and CEO Chris Kapches, noting that sales in those segments slipped 12% and 14.4%, respectively.
“By comparison, condominium apartment sales volumes increased by 7.6% compared to last August. These numbers are clearly a reflection of the affordability barriers impacting buyers.”
While prices swung high across the board, the report notes that the average selling price of detached and semi-detached homes was “almost double” the selling price of condominium apartments in the region, with those prices ending up at $1,416,366, $1,067,980, and $705,572, respectively.
Unsurprisingly, condo prices were higher in the City of Toronto ($724,549) and higher still in the city’s central core ($760,485), “where 63% of all condominium apartment sales take place.”
“The sales of detached and semi-detached properties that took place did so at a pace and at sales-to-list ratios that are more consistent with a classic robust market, notwithstanding the low sales volumes,” says Kapches.
The report highlights that detached properties in the City of Toronto sold in 18 days, and at 101% of their asking price. Semi-detached properties sold in just 13 days, and for 105% of their asking price. In Toronto’s eastern districts, semi-detached properties sold in only 11 days, and at 107% of their list price.
“In isolation, these sales numbers would reflect a resale market that’s on fire,” writes Kapches.
“Underlining this performance are several factors. Firstly, although supply improved in August, it is still historically low. During the month of August, 12,296 properties came to market, 16.2% more than the 10,578 homes that came to market for the same time last year. Secondly, demand remains extremely high.”
The third underlining factor, continues Kapches, is mortgage interest rates, which, “coupled with 2% stress testing, make the purchase of detached and semi-detached properties at their current price points prohibitive.”
“Essentially, what the data is telling us is that demand is high, but few buyers can afford Toronto real estate,” he explains. “Those who can buy are buying quickly, and paying above the seller’s asking price.”