As per the latest reports, detached homes have been seeing a major revival in the Toronto real estate market. In recent times, detached homes were a little lower down the pecking order in terms of demand on account of their hefty prices and rising unaffordability levels of the majority of the buying population. With prices skyrocketing for most detached homes in Toronto and other parts of the GTA (Greater Toronto Area), most people were interested in buying condominiums which has led to this category becoming the red-hot realty space at the moment.
However, detached homes are steadily making a comeback and this has been possible only due to a revival in overall demand, particularly amongst buyers in the luxury real estate segment. As per reports from TREB (Toronto Real Estate Board), detached home inventory touched a new high in January 2019 which was the highest in years. The growth in inventory has combined with slightly lower sales volumes to spark a reduction in prices of these properties. As a result, experts believe that detached homes may be bouncing back again as a category in Toronto with the lower prices expected to attract more luxury real estate buyers and investors.
Prices have come down to the levels that were seen in the year 2016. This is good news for prospective buyers who can now purchase these properties at comparatively lower prices. Demand should ultimately go up in the category and make it a viable option for developers once again as opined by several market experts who have analysed the recent trends. Prices of average detached homes in the GTA (Greater Toronto Area), according to TREB, rolled back gains over the last two years. The detached benchmark pricing stood at $903,800 for January 2019 which indicates a drop of roughly 0.04% as compared to the same period last year. This is quite negligible and shows how demand for the category is actually keeping price thresholds quite competitive while arresting any major decline.
For the City of Toronto, prices of detached homes went up by just 0.77% as compared to the previous year to stand at an average benchmark of $1,089,100. Prices of homes in this category have now rolled back to what they were as of February 2018 according to several reports. TREB has reported prices coming back to 2016 levels in this context. This should only make detached homes more attractive for buyers and lead to higher sales and eventual price growth over the next few years as forecasted by multiple industry watchers.
Observing other market trends in this category
The growth pace has definitely been enhanced in the suburbs or other parts of the GTA while it has come down a little for the City of Toronto. The annual growth rate posted by TREB was -0.04% and this is an improvement from the previous month, i.e. December 2018. However, the 0.77% figure for the City of Toronto is still lower than the earlier month although it is positive if you take the year-on-year calculation into account. Both these numbers are behind the CPI and may be adjusted to ultimately reflect negative growth as per reports. Prices have come down by approximately 11.31% from the peak levels throughout the area covered by TREB. They have also reduced by a whopping 13.91% for the City of Toronto. This will certainly be a bonanza for global and domestic investors alike as far as detached homes are concerned.
The transaction volumes should most definitely increase as a result of these market trends. The average selling prices for detached homes continued their downward shift. The average sale price touched $941,488 for January 2019 as noted by TREB and this represents a decline of 3.02% as compared to the previous year. The City of Toronto had the average price touching $1,174,134 which is lower by 8.55% as compared to the last year. The average pricing in the City of Toronto has come down more drastically as compared to the suburbs. At the same time, sales figures for detached homes witnessed a considerable improvement as compared to last year. 1,703 units were sold for detached homes in January 2019 as per TREB reports and this was higher by 2.65% as compared to the previous year. With lower prices, the sales volumes will only go up more in the near future.
However, for the City of Toronto, sales figures were lower by 9.04% and stood at 342 units. The number of new detached home listings increased massively by 11.13% as compared to last year as per TREB reports and touched 4,862 units. 960 out of these listings came from the City of Toronto which indicates an increase of 32.39% as compared to the previous year. With new listing volumes outstripping sales volumes, the total inventory volumes were pushed to higher levels.
There was also an increase in the total detached home inventory available for sale. 7,087 active detached home listings were reported by TREB for January 2019 which indicates growth of 3.93% as compared to the previous year. 1,331 of these listings were derived from the City of Toronto which indicates an increase of 4.72% as compared to the previous year. This is the highest level of inventory observed for the detached home segment in a period of 8 years. This may lead to some quick sales in the category in the next few months on account of the considerably lower prices.
Luxury real estate is reviving across the country
In what may be a precursor to steady growth in the detached home segment in Toronto and much of the GTA (Greater Toronto Area), the luxury real estate market seems to be reviving throughout Canada. 2019 is forecasted to witness a moderate increases in prices and sales volumes alike for the luxury real estate market. However, this category will be a buyer’s market this year according to experts. Toronto had a drop in luxury realty transactions last year due to measures like the foreign buyer tax, mortgage stress test and higher rates of interest.
While prices in the luxury realty market will not go down hugely, they will be more balanced and sales volumes will also be on the higher side. However, buyers will drive the transactions forward as per experts. The situation will improve considerably over the next few months with rates of interest being at steady levels and lower inventory in some categories. Buyers will have more negotiating power but luxury real estate sales volumes will go up in the short and midterm as forecasted by several experts.