Toronto Income Property Newsletter: January 2015

I’d like to take this opportunity to wish you and your family all my best wishes for a very safe and prosperous 2015. May all of your hopes and resolutions for this year come to pass. I also hope that you all had a very enjoyable Christmas break.

As this New Year gets underway, the Toronto income property market remains as robust as ever. I anticipate 2015 to be another crazy year with continued high demand and lower inventory levels similar to 2014. Pretty much more of the same I suspect. If you ever have any questions about real estate investing in Toronto, or would like general information on the duplex and triplex market, please don’t hesitate to get in touch with me. I will do my best to guide you through this tricky market, but please remember folks that patience is the key.

I’m putting the finishing touches on the up-to-date version of my income property guide so hopefully that and our newly designed and upgraded Plex Realty website will be ready for you to check out next month.

– P.A.

2014 Toronto Income Property Market Wrap-up

There were 146 properties that sold last year in Central Toronto (all MLS Central districts) with three or more kitchens. While there were many more sales of duplexes with only two kitchens, most two kitchen properties are houses with basement apartments so I don’t count them in my analyses. With the exception of two properties in the Oakwood/Vaughan neighbourhood, all income properties sold for over $500,000. The average sale price in downtown Toronto was just over $1.2M. Some very pricey sales in Rosedale brought that average up.

In Toronto’s east districts (E01,E02,E03) there were 64 sales of three+ unit properties. The average sale price was just over $850K. Interestingly enough there were only two sales in my neighbourhood of North Riverdale. It didn’t seem like too much was going on near me. All sales landed under $2M with most of the priciest income properties selling in the Beaches.

In Toronto’s west end areas closest to downtown (W01,W02,W03) there were 99 sales. Average sale price was $920K so a bit higher than the east side. High Park continues to be one of the highest priced areas in the city for investment properties. It also appears to me that more detached properties sold on the west side than in Central and East. There were also a lot of west end sales (perhaps even more so than the rest of Toronto) that sold for over asking price.

Overall, the days on market for 3+ kitchen properties was a little under the average for the city so it shows that these investment properties were in very high demand. Whether for live-in or investment only, buyers were keen to not

miss out on quality multiplexes when they hit the market. This is not surprising given the overall housing market situation in Toronto.

Toronto market to remain difficult for buyers

My thoughts on the income property market are still pretty much what they were at this time last year. In my opinion, the Toronto real estate market will not crash this year despite what some financial analysts may be predicting. I don’t see much of a price correction coming either. The market in 2014 was stronger than ever, with many houses trading in the downtown core for higher than the asking price. Clearly, for quality downtown duplexes and triplexes, the demand was far outpacing the available supply. Since interest rates are likely to hold steady, I don’t see an immediate catalyst on the horizon that will start any major price drops.

Toronto house prices are expected to climb a further 4 per cent in 2015, outstripping the Canadian average of 2.5 per cent, according to the annual Housing Market Outlook report by ReMax. The number of freehold houses in Toronto — as opposed to condos — available for sale continues to be at historic lows and isn’t likely to improve during 2015, driving more bidding wars and higher-than-average price gains. GTA home prices are up more than 8 per cent this year over 2013 and, by the end of 2015, could average $589,100, ReMax predicts, up from about $566,400 this year.

Toronto remains a very desirable city to live in and despite higher resale home prices, it is clear that the demand will persist. There has been a large population increase over the past five years. There has been a lot of new immigrants arriving in town. Whilst many new condos have been built to satisfy the housing needs of these new residents, we can’t build new houses downtown – so these properties will hold and go up in value. Our house prices are not out of line with other major North American cities even though it has very much been a sellers’ market. When Canada is consistently voted as one of the best places in the world to live, and our banking system remains in strong shape, we may see prices rise even higher in the months ahead.