May 2013 Market Report: The sales picture in the GTA has improved markedly [INFOGRAPHIC]

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Toronto skyline by SanGatiche

 

The number of homes changing owners totalled 10,182 in May 2013, down 3.4 per cent from the 10,544 transactions recorded in May 2012, according to the Toronto Real Estate Board (TREB). Home prices increased again last month. The average selling price for real estate rose to $542,000 — a 5.4 per cent rise from a year ago, when the average price paid for a property was $514,567. The low-rise segment of the market, particularly single-detached and semi-detached homes, is driving sales and pushing the average price growth down a little. Low-rise houses are en vogue now, and TREB president Ann Hannah believes that there are better times ahead:

The sales picture in the GTA has improved markedly over the past two months. While the number of transactions in April and May remained below last year's levels, the rate of decline has been much smaller. A growing number of households who put their decision to purchase on hold as a result of stricter lending guidelines are starting to become active again in the ownership market. 

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City of Toronto

Detached houses were the most demanded house type last May, and their sales rose 3.0 per cent from a year ago. May recorded 1,475 houses sold, for an average price of $864,536. This year, you needed 5.5 per cent more capital to buy a detached house than you would have needed in May 2012. Detached house sales are the only green numbers in the sales chart this month.

There were 1,499 condo apartments sold in May 2013. Although the number of units sold is the highest in City of Toronto, it's 6.4 per cent lower than last May. The average price for a unit (the number economists and realtors worry most about) was $372,768, having risen only slightly, by 1.2 per cent.

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Condos at Night by John Vetterli

The real market test is expected to come in 2014 and 2015, when the condos that are now under construction will pass their final inspection and become available to home buyers. Many of these units are sold already, but a high number of condos will be released to the market at once. Benjamin Tal, deputy chief economist for CIBC World Markets, believes that this could help to drive prices and record-high rent back down. However, steps have to be taken to guarantee a gentle transition. Finance Minister Jim Flaherty tightened mortgage rules for the fourth time in four years in July 2012, citing concern that overbuilding condos could lead to sharp price declines. "The best case scenario is a soft landing," said David Tulk, chief macro strategist at Toronto-Dominion Bank's TD Securities in Toronto.

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Typical Cabbagetown House by Steve Browne & John Verkleir

 

The highest jump in selling price was recorded in the semi-detached housing sector. The average price rose 7.8 per cent, to $633,625, and made semi-detached houses the second most expensive housing option. To the contrary, sales dropped by 8.6 per cent, and only 434 units were sold in May 2013.

The average selling price of a townhouse remained almost unchanged compared to the last year, up only 0.2 per cent. Home buyers spent $463,772 on a townhouse on average. However, the number of sales fell steeply, by 18.3 per cent, and only 389 units sold this past month.

 

Greater Toronto Area

TREB records from recent months show that the city and GTA seldom reveal the same trends when it comes to the best- and worst-selling property types. Experts believe this trend is natural, since people living in downtown Toronto have a different lifestyle and prefer different homes than people living in the suburbs. Last month, detached homes recorded the highest rise in sales and drove the market in both areas. Detached houses were the absolute bestseller in the GTA, with 3,731 units sold — 0.1 per cent more than in May the year before. The average selling price climbed to $602,576, and home buyers needed 4.3 per cent more capital than they would have needed in May 2012 to buy a detached home.

Records show that an average townhouse sold for $375,576, and the price rise for townhouses is very similar to that of detached houses, at 4.4 per cent. Last month, 1,190 townhouses sold — 3.0 per cent less than last May.

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Row Houses by Steve Harris

 

Semi-detached houses have been the steadiest housing segment on the market, due to only a minor change in sales and price figures in year-over-year comparison. In May 2013, 690 units sold, which is only 0.7 per cent less than the year before, while the average price rose 2.3 per cent, to $409,632.

TREB records show a substantial sales change in the condo market in the GTA in a year-over-year comparison. Condo apartments were the worst-selling housing type, and sales fell 16.0 per cent over the year. There were 581 units sold for an average price of $293,398. However, the average selling price remained almost unchanged yet rose slightly, by 0.9 per cent.

The real estate market in Toronto has been through hard times, and even though May 2013 may not be viewed as very positive, given the circumstances, the 3.4 per cent drop in sales and the 5.4 per cent rise in the average price are relatively favourable results. Jason Mercer, TREB's senior manager of market analysis, predicts that Toronto will manage to keep on track for a 3.5 per cent increase in average selling price for 2013 as a whole.

 

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