Real Estate News

Shopping for a GTA condo or townhouse? Over half the market isn’t in your favour

After more than a few frothy years, the GTA real estate market is cooling. That's not bad news for sellers as there are still plenty of regions with elevated demand and limited supply when it comes to condos and townhouses
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Condos and townhouses certainly got their fair share of activity in 2018. Once the go-to property type for empty-nesters and first-time buyers, condos and townhouses have now entered into the mainstream with more and more families (or those looking to grow a family) examining condos and townhouses as a more affordable urban alternative.

No wonder, then, certain market regions are still very much in seller’s territory when it comes to condos and townhouses.

According to recent statistics released by the Toronto Real Estate Board (TREB), just over half (54%) of Metro Toronto is still a seller’s market for condominiums and townhouses, while only 11% of the city’s 35 neighbourhood areas are in a buyer’s market.

In the Greater Toronto Area, only 50% of real estate markets east of Metro Toronto are now balanced, with Ajax and Whitby remaining as sellers’ markets when it comes to condos and townhouses. West of Metro Toronto is about the same, with Mississauga, Halton Hills and Milton reporting steady sales activity going into September 2018.

For buyers, the bright spot is the market north of Metro Toronto. Turns out sales activity in some of the hottest real estate markets, such as Vaughan, Richmond Hill and Aurora, has cooled and these areas are now in a buyer’s market. Other hot spots, such as Newmarket, Markham and Unionville also show cooling sales activity, but demand for condos and townhouses in these areas keep these regions in balanced markets.

The GTA Housing Market Report for September 2018 Condos & Townhouses

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Why use active listings versus new listings?

There are really good reasons for examining the competitiveness of the GTA real estate market using the sales-to-listings ratio.

First, this ratio provides a fairly good assessment of where a current area is when it comes to supply and demand. Also, because the ratio doesn’t strip out stale listings — properties that are just sitting on the market and not selling — this ratio doesn’t sugar coat the activity in a particular market.  In this way, we get a more realistic and comprehensive view of how a particular region is fairing when it comes to market absorption. It’s also why the sales-to-active-listings ratio is also known as the Market Absorption Rate (MAR).

To calculate the sales-to-active-listings ratio (or MAR), take the total number of sales at the end of a given time period (in this case, a calendar month) and divide it by the total number of active listings available during the same time period. Using Metro Toronto’s numbers at the start of September, as an example:

1,564 sales / 2,650 active listings = 59.02%

The higher the ratio, the more demand for property in those areas and the more opportunity a seller has to list high. 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 TREB and the Realtors’ Association of Hamilton-Burlington, a ratio between 35% and 55% indicates a balanced market. Ratios above 55% indicate a seller’s market, while ratios below 35% indicate a buyer’s market.

Key takeaway: North and East of Metro TO good markets for condo & townhouse shoppers

Like it or not, but more than half of Metro Toronto isn’t favourable to condo and townhouse buyers. As a result, if you want to avoid bidding wars or inflated prices, buyers will need to shop competitively in Metro Toronto or look to the north or east for less frothy markets.

Where to Buy in in 2018: Greater Toronto Condos

Where to Buy in in 2018: Greater Toronto Townhouses

For a few good bets, consider the following (ranked based on market absorption ratio):

10 of the Top Areas in the GTA that Favour Buyers

  1. E06 (Oakridge, Birchcliff – Cliffside)
  2. Aurora
  3. Vaughan
  4. Simcoe Region
  5. C09 (Rosedale – Moore Park)
  6. York Region
  7. Richmond Hill
  8. C06 (Clanton Park, Bathurst Manor)
  9. E03 (Playter Estates – Danforth, Broadview North, Danforth Village – East York, East York, O’Connor – Parkview, Woodbine – Lumsden, Crescent Town)
  10. W09 (Willowridge – Martingrove – Richview, Humber Heights, Kingsview Village – The Westway)

10 of the Top Areas in the GTA that Favour Sellers

  1. Whitby
  2. W02 (High Park North, Lambton Baby Point, Runnymede – Bloor West Village, Junction Area, Dovercourt – Wallace Emerson – Junction)
  3. Milton
  4. E10 (Highland Creek, West Hill, Centennial Scarborough, Rough E10)
  5. C12 (St. Andrews – Windfeilds, Bridle Path – Sunnybrook – York Mills)
  6. W01 (High Park – Swansea, Roncesvalles, South Parkdale)
  7. W10 (West Humber – Clairville, Rexdale – Kipling, Elms – Old Rexdale, Thistletown, Mount Olive – Silverstone – Jamestown)
  8. Dufferin Region
  9. E01 (North & South Riverdale, Blake – Jones, Greenwood – Coxwell)
  10. W05 (Humber Summit, Humbermede, Humberlea – Pelmo Park W5, Downsview – Roding CFB, Glenfield – Jane Heights, Black Creek, York University Heights)

38% of Metro Toronto stubbornly stays in a seller’s market for single-family houses

Romana King
Romana King

Romana is an award-winning personal finance writer with an expertise in real estate. She is obsessed with the property marketplace and is the current Director of Content at Zolo.