GTA’s Rising Price Floor

The condo market was indisputably the best performing housing sector in 2018. The benchmark price for condos in the GTA ended the year at $509,700, 9% above where prices ended 2017. This is welcomed news for condo owners, but increasingly frustrating for those trying to enter the market. In 2012, 18,591 homes were sold for under $300,000 in the GTA. By 2018, that number had dropped all the way down to just 1,204. Despite the price growth struggles the detached market may be having, the condo market has remained strong, and that means the entry price to the housing market is only moving up.

sales by prSource: TREB, Six Housing Sense

In 2012 the two largest shares of sales by price range came from the $300,000 to $500,000 column with 37,152 sales and the under $300,000 price range with 18,591. Last year, the largest shares of sales had shifted from under $500,000 to between $500,000 and $1 million. 23,715 sales were for home purchases between half a million and $700,000, and another 21,449 were from that point to $1,000,000.

sales % comparisoSource: TREB, Six Housing Sense

Breaking down the sales by percentages, we see the shift from under $500,000 sales to under one million more clearly. Six years ago, 65% of all sales were purchased for under half a million dollars, while only 5% of sales were over $1,000,000. In 2018, the lower price segments made up just 24% of home sales, and 18% of purchases bought for at least seven figures. The graph shows how both categories under $500,000 dropped in each two-year interval, while the three categories above $500,000 only rose year after year.

sales range %Source: TREB, Six Housing Sense

The final graph shows the trendlines for each price range. Homes under $300,000 have fallen from representing 22% of the market to just 2% market share in only six years. The next category up to $500,000 has seen its market share be cut almost in half, from 43% to 22%. Not surprisingly, the higher price points trend in the exact opposite direction. Home sales from $700,000 to $1 million have nearly tripled from 10% to 28%, and homes for over a million have more than tripled from 5% to 18%. The only silver lining there is that the over $1,000,000 market share has been nearly flat since 2016, gaining just 1% in the last two years.

As Toronto moves forward watching the stagnant prices of the detached market, it is important to not overlook the ever rising price floor that is becoming a bigger and bigger barrier for residents. Increased condo prices may be great for previous first time buyers who are now building equity in the housing market; however, they are also making it progressively more challenging for the next generation of buyers.

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