Housing Market News

Buyers’ and sellers’ markets in Greater Toronto by neighbourhood

Demand for houses in Metro Toronto keeps sales activity up in many neighbourhoods, while condos and townhomes in commuter communities outside of Metro Toronto are in high demand

Ontario’s largest real estate market reads a bit like a Choose-Your-Own-Adventure novel. Remember, those books that allowed you, the reader, to make a choice and that choice would dictate how your story ended. Of course, most of us snuck a peak to see what the best outcome was in the Choose-Your-Own-Adventure story — the same luxury can’t be found in Greater Toronto’s housing market.

Up, down, up and down, this is the micro-cycle this massive real estate market has been going through for the last 12+ months and it doesn’t look like this adventure is doing to stop anytime soon.

Of course, just because home prices dipped doesn’t mean housing prices are affordable. After a decade of rising prices, it’s hard to use the words affordable and house in any sentence when describing Greater Toronto’s property market. Still, demand for property — even the battered single-family property market — continues and this means buyers must still pay attention to what the current micro-market is doing in their particular neck of the woods. This is where market type plays a role. Finding out whether or not a city or neighbourhood is in a buyer’s, seller’s or balanced market helps buyers and sellers to gain awareness of how competitive a market is in a particular area (given a particular time frame).

While many market’s are measured using the sales-to-new-listings (SNL) ratio, we chose to measure markets using the sales-to-active-listings ratio. The problem with the SNL ratio, is that it ignores stale listings — homes that came on the market more than 30 days ago. Ignoring older listings distorts the current supply and demand of an area. To help overcome this distortion, we use the sales-to-active-listings ratio, also known as the market absorption rate. By capturing all active listings and comparing it against sales activity, we get a much more realistic read on the current market conditions. Better still, this metric can also be used to measure markets of any size, from a national scale right down to a specific city or neighbourhood.

Keep in mind freehold houses and strata-units (which include condos and townhomes) also move in different market micro-cycles. To help get a more realistic picture of the Greater Toronto real estate market, we analyze the market absorption rate for both freehold houses and strata units. The result is a snapshot of the market type for each of the more than 70 neighbourhoods in the GTA for both freehold houses, as well as for condos and townhomes.

For a better understanding of the top areas and neighbourhoods for buyers and sellers, see our Top 10 lists below.

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It’s easy to sit on the sidelines and call the shots but for anyone actively looking to buy or sell the factors affecting this big decision aren’t so black and white.

Homes in popular North Toronto commuter neighbourhoods (as well as in historically higher-priced neighbourhoods) now appear to offer better deals given that they are in a buyer’s market. For buyers this means less competition and more room for negotiation

For instance, it’s hard to sort out whether or not a buyer looking should hold out for (more) price drops or pounce now, even if the market hasn’t hit bottom, yet. As a seller, it’s hard to decide if selling is a good idea, given that the market may stabilize or even go up (as witnessed by the latest month-to-month sales activity).

The key is to find out what type of market your neighbourhood is currently in, what the recent trend has been and how future rat increases will impact this trend (and the overall market conditions). What’s key in this decision is how much purchasing power is lost due to higher mortgage interest rates.

The GTA current market conditions mean that 27 (out of 69) neighbourhoods are in a buyer’s market, but this is actually a drop from last month when 43 neighbourhoods were in a buyer’s market. Most of these neighbourhoods transitioned into a balanced market, where supply was keeping up with demand, but this could change again if supply increases and demand dwindles due to a lack of price adjustments or an increase in mortgage interest rates.

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It’s amazing what a month will do. Last month, the macro view of Greater Toronto was that the market was balanced with only 15 out of the 69 neighbourhoods in a seller’s market. Fast-forward to November and there are more than twice as many neighbourhoods (34, to be precise) that are in a seller’s market, when it comes to condos and townhouses.

Condos and townhouses in commuter-communities will offer buyers the best deals, while sellers in Halton Hills and Ajax have the upper hand

This isn’t too surprising. Much like the last minute push in 2017, before the January mortgage regulation took effect, now buyers are rushing to get in before further mortgage interest rate increases. And with good reason. On average, a 1% increase in mortgage rates will mean a 10% slash on your housing purchase price. This is significant for first-time buyers just struggling to get into the market. As a result, many buyers (and probably investors) are jumping on lower-priced properties which, historically, have been condos and townhomes. As a result, many markets that had balanced over the last few months are now back in a seller’s market, including: Toronto, Peel and Halton.

It’s important, however, to look at what each neighbourhood is doing within each municipality. Even in Toronto, where the overall market favours sellers, buyers can still find good spots where demand is down.

For those actively looking to buy or sell, consider the following, ranked based on the market absorption ratio or sales-to-listings ratio.

The best bet for buyer’s are neighbourhoods with lower market absorption rates.

10 Top areas in Greater Toronto that favour single-family home Buyers

  1. Toronto, C12 (St. Andrews – Windfields, Bridle Path – Sunnybrook – York Mills)
  2. Toronto, C14 (East Willowdale, Newtonbrook)
  3. King City
  4. Richmond Hill
  5. Uxbridge
  6. East Gwillimbury
  7. Toronto, C07 (West Willowdale, Newtonbrook, Lansing – Westgate, Westminster – Branson)
  8. Toronto, C15 (Bayview Woods – Steeles, Bayview Village, Henry Farm, Don Valley Village, Hillcrest Village, Pleasant View)
  9. Toronto, C06 (Clanton Park, Bathurst Manor)
  10. York

10 Top areas in Greater Toronto that favour condo & townhouse Buyers

  1. Whitchurch-Stouffville
  2. Aurora
  3. Uxbridge
  4. Oshawa
  5. Toronto, C12 (St. Andrews – Windfields, Bridle Path – Sunnybrook – York Mills)
  6. Toronto, E06 (Oakridge, Birchcliffe – Cliffside)
  7. Simcoe
  8. Dufferin
  9. Toronto, E08 (Cliffcrest, Eglinton East, Scarborough Village, Guildwood)
  10. Markham

10 Top areas in Greater Toronto that favour sellers of single-family homes

  1. Toronto, E01 (North & South Riverdale, Blake – Jones, Greenwood – Coxwell)
  2. Toronto, E02 (The Beaches, Woodbine Corridor, East End – Danforth)
  3. Toronto, W02 (High Park North, Lambton Baby Point, Runnymede – Bloor West Village, Junction Area, Dovercourt – Wallace Emerson – Junction)
  4. Toronto, C02 (Annex, Wychwood, Casa Loma, Yonge – St. Clair)
  5. Toronto, C01 (Niagara, Waterfront Communities C1, The Islands, Little Portugal, Dufferin Grove, Trinity Bellwoods, Palmerston – Little Italy, University, Kensington – Chinatown, Bay Street Corridor)
  6. Toronto, W07 (Stonegate – Queensway)
  7. Toronto, E09 (Bendale, Woburn, Morningside)
  8. Toronto, W01 (High Park – Swansea, Roncesvalles, South Parkdale)
  9. Toronto, C03 (Oakwood Vaughan, Humewood – Cedarvale, Forest Hills South, Yonge – Eglinton)
  10. Toronto, W03 (Rockcliffe – Smythe, Keelesdale – Eglinton West, Caledonia – Fairbank, Corso Italia – Davenport, Weston – Pellam Park)

10 Top areas in Greater Toronto that favour sellers of condos & townhouses

  1. Halton Hills
  2. Toronto, W01 (High Park – Swansea, Roncesvalles, South Parkdale)
  3. Toronto, E01 (North & South Riverdale, Blake – Jones, Greenwood – Coxwell)
  4. Toronto, W07 (Stonegate – Queensway)
  5. Toronto, W03 (Rockcliffe – Smythe, Keelesdale – Eglinton West, Caledonia – Fairbank, Corso Italia – Davenport, Weston – Pellam Park)
  6. Clarington
  7. Caledon
  8. Toronto, W02 (High Park North, Lambton Baby Point, Runnymede – Bloor West Village, Junction Area, Dovercourt – Wallace Emerson – Junction)
  9. Ajax
  10. Toronto, E10 (Highland Creek, West Hill, Centennial Scarborough, Rouge E10)

Expressed as a percentage, the sales-to-active ratio (or MAR – Market Absorption Rate) is calculated by taking the total number of sales at the end of a given time period (in this case, a calendar month) and dividing it by the total number of active listings available during the same time period. The higher the ratio, the more demand for the property and the more opportunity a seller will have to attract a higher price for their home for sale. A lower ratio indicates slower sales and the potential for falling house prices. A balanced market is when the supply of housing meets the demand from potential buyers. In a balanced market, sellers usually accept reasonable, close-to-list-price offers; homes typically stay on the market for close to the average number of days and prices remain fairly stable within the region.

According to the Toronto Real Estate Board, a market is balanced territory when the sales-to-listings ratio is between 35% and 55%. Ratios above 55% indicate a seller’s market, while ratios below 35% indicate a buyer’s market.

Romana King and David Weisz
Romana King and David Weisz