In the dog days of summer, the Toronto real estate market was not as hot as the previous year, driven by rising borrowing costs, economic uncertainty, and limited inventories available in the housing industry. According to the Toronto Regional Real Estate Board (TRREB), residential property sales tumbled slightly more than five percent year-over-year in August, totalling 5,294 units. Within detached homes, sales declined at an annualized pace of 11.2 per cent in August, with 451 units exchanging hands. Semi-detached properties also experienced a drop in sales, totalling nearly 13 per cent with 138 transactions.
Townhomes and condominiums enjoyed a robust 15.6 per cent and 6.5 per cent year-over-year increase in August.
Despite the drop in sales activity, prices remained elevated. Detached home prices advanced nearly three percent to $1.416 million, semi-detached prices swelled 6.9 per cent to $1.067 million, and townhome costs jumped close to four per cent to $935,800. Condo units slipped 0.9 per cent to $705.572, TRREB figures reveal.
“In the short term, we will likely continue to see some volatility in terms of sales and home prices, as buyers and sellers wait for more certainty on the direction of borrowing costs and the overall economy,” said TRREB president Paul Baron in a statement.
With the lacklustre performance to finish the summer, does this mean prospective homebuyers might come across detached homes located in affordable and undervalued areas? If so, where can households potentially find these listings?
Bathurst Manor: Affordable and Undervalued
For many young professionals and families searching for affordability and an undervalued property in the Toronto real estate market, one area of the central core that has been a popular destination for years is Bathurst Manor and Clanton Park. Prospective homeowners will see a wide array of bungalows and two-story residential properties throughout the Bathurst Manor and Clanton Park neighbourhoods.
The average price for detached homes sold in this part of the city is about $1.7 million, the lowest average price point in the central core. In the first half of 2023, the area enjoyed a modest increase in homebuying activity compared to the same time a year ago. Despite fewer detached home sales in 95 per cent of surveyed markets in August, Bathurst Manor and Clanton Park were two of the few places to buck this trend in the housing market, with sales climbing 1.4 per cent.
Indeed, for those individuals who are price-conscious, Bathurst Manor and Clanton Park maintain a larger supply of detached properties situated on 50-foot lots, providing modest price relief for buyers.
Moreover, market analysts note that Bathurst Manor and Clanton Park can potentially increase the home’s value in the future through demolition or renovation, particularly if housing stocks do not improve in the Toronto housing market anytime soon.
Based on the latest real estate association data, this is likely to be the new normal for a while. While the latest numbers show that new residential listings were up a little more than one per cent month-over-month in August, they are down year-to-date.
And industry leaders note that governments are not showing signs of doing what is necessary to bolster supply, leaving prices to maintain their upward trajectory, especially in the downtown core.
“All three levels of government need to be focused on the key issue impacting affordability in the GTA: lack of supply,” said TRREB CEO John DiMichele in a statement. “Right now, there continues to be a policy mismatch between population growth through immigration and temporary migration and bringing online enough housing to accommodate this population growth. If we can’t house newcomers, they will look elsewhere, and Canada and the GTA will lose its competitive edge on the global stage.”
Supply Continues to be the Main Issue
This year, many headlines have spotlighted just how dire the supply situation has become in North America’s fourth-largest city and the rest of the country. In the spring, the Canada Mortgage and Housing Corporation (CMHC) warned that prices could accelerate again due to an “alarming” shortage of new construction.
From the Toronto Star:
“In Toronto the report forecasts between 28,500 and 33,500 housing starts for this year, 60,000 to 74,000 sales, and an average MLS price of $1.043 to $1.107 million.
CMHC economist Dana Senagame said that in pockets of the GTA’ anecdotally at least we’ve heard reports of properties being sold within hours of being listed and bidding wars.’ Buyers who’ve been holding back may now be more comfortable making a purchase. But overall, ‘the market is still very, very unaffordable.’”
Be it Canada or downtown Toronto, supply is failing to keep up with demand. If the reports are accurate and homebuyers are snatching homes that have erected for-sale signs on their properties as fast as you can say the Toronto Blue Jays, prices are unlikely to come down to their pre-pandemic levels.