Buoyed by extraordinary demand throughout the first three quarters of the year, residential home sales in the Greater Toronto Area softened somewhat in the final quarter of 2004. Increased listing inventory and the advent of the traditional seasonal slowdown impacted overall sales, especially in the city’s peripheral areas. By year-end, sales are expected to climb nine per cent to 85,700 units, up from 78,898 one year earlier. Housing values in the Greater Toronto Area are forecast to continue to spiral upward, with average price peaking at $318,000 in 2004, up 8.5 per cent over 2003. Both unit sales and average prices are expected to break records set in 2003.
First-time buyers continue to be an integral piece of the housing puzzle. Fuelling demand for affordably-priced homes - condominium apartments, townhouses, link, row, semidetached, and smaller single-detached – first-time buyers have yet to be deterred by recent interest rate hikes. The desire to own a home is strong in Canada’s largest centre. As a result, first-time buyers are looking at more affordable new home construction in suburban areas like Mississauga, Ajax, Pickering, Richmond Hill, and Newmarket.
Those who seek properties in close proximity to the downtown core will likely sacrifice size for location, although there are some up-and-coming neighbourhoods that are proving attractive to entry level purchasers. Once again, Roncesvalles, South Parkdale, East York, and the Lansing area lead the charge for affordable product, with average prices still hovering under $300,000 in East York and between $300,000 and $400,000 in Roncesvalles, South Parkdale, and the Lansing area.
Although an influx of new inventory has created more choice for purchasers in the East, West, and North districts, the number of homes listed for sale in Toronto’s central core remains on par with 2003 levels – 23,444 homes listed for sale year-to-date compared to 23,316 during the same period in 2003. Located within the city’s central core are many of the coveted blue chip neighbourhoods, such as Lytton Park, Cricket Club, Forest Hill, Summerhill, Rosedale, South Hill, and the Annex.
New, wellpriced listings in these older, established areas continue to be quickly snapped up by interested purchasers, often in multiple offer situations. Upper-end home sales priced at $1 million plus, many of which are situated in the central core, have also seen a 36 per cent jump over 2003 levels. Condominium apartments and townhomes continue to represent approximately one in every three sales in the Greater Toronto Area.
Baby boomers have contributed to strong activity in the upper end of the market, as they make lateral moves from centrally-located, single-detached homes to ideally-located condominium apartments in Toronto’s tony Yorkville area. First-time buyers are also partaking in condominium purchases in the downtown core where year-to-date sales have climbed from 2,078 units in 2003 to 2,347 units.
Average price, incidentally, has also followed suit, rising from approximately $271,000 to just over $278,000 in 2004. With strong fundamentals in place for another solid year of economic performance, real estate activity is expected to bode well in 2005. In keeping with our earlier forecast, RE/MAX is projecting a further increase of two per cent in unit sales, bringing the number of homes sold on residential MLS to 87,400 units in 2005. Average price projections call for a 3.5 per cent increase to $329,000 by year-end, moderating somewhat from 2004’s hectic pace.