Many American houses, and particularly in America’s largest cities, are regularly on the market in excess of $1 million. I’ve often been surprised by the sales in my favourite neighborhoods when a house selling for a modest price translates into more traffic than a property in which the price is far higher.
As far as Toronto goes, there’s always been an upper price bracket for houses for sale, but how much is that upper price bracket going to rise? The answer might surprise you. The average Toronto house for sale now sells for $1,008,000, which is right in the lower half of that segment of the price range.
That being said, there is a telling story about how much prices have risen in Toronto in recent years that makes the city more interesting to our readers than what’s going on elsewhere.
I was waiting for my journey on the GO train to North York in 2010 when I noticed that one of the southbound doors was ajar. Out of curiosity, I pulled the doorknob behind me, put the key in the lock and waited.
The train showed me this residential address: 13677-13666 Stoneybrook Ct.
It was listed for sale that month at $900,000, for less than the average house sold that day. That house sold a week later for just over $950,000 and it’s on sale again right now.
Currently, it’s listed at $999,999, which brings the median price for all houses in the area of $975,000, less than a dollar higher than the downtown trend in Toronto. So I said to myself: where are all of these houses selling for?! Are all of these houses selling at below average rates and where are they selling in the price band that our average house is selling in?
Well, when I went back to check what was going on just a couple years later, it appeared that we were not that different than we had been in 2010.
In 2012, the total number of home sales in North York was around 9,000 and the median price at $970,000. Since the prices of houses had increased by almost 25 per cent in five years, this amounted to $8.7 million in new sales. This means that about 15 per cent of the houses in North York were being sold at just below $1 million. The average North York house sold for $1,179,999 that year.
All told, the homes were being sold in just slightly under six months on average, which means that we were having double digit growth in average home sales.
Looking at what was going on in 2015, the pattern of home sales stays consistent with what had gone on since 2010. The number of home sales was growing faster than the median price of homes in 2013 and continued to do so in 2014.
In 2015, there were just under 10,000 home sales and the median price was $990,000, which is around $9,800 cheaper than the average sale price of a house in the city.
In 2016, the second year of the seven-year plan for the GTA as a whole, the median price of home was $1,230,000. However, there was another big spike in 2016. Compared to the previous year, homes sold in 2016 sold for almost $10,000 more. In 2015, the median price in Toronto was $1,361,000. Thus, in 2016, we had an increase of almost 10 per cent in home price, although the average price only went up by about 1.5 per cent.
There is a trend from the average sales price of homes in 2015 to $1,230,000 in 2016, suggesting that we are not that far off from what we were in 2010.
So what’s going on in North York? At the core of this are things that are common to the whole GTA. Canadians enjoy their environment and are happy to pay less for the privilege. If the weather and the communities they live in are good, people look at houses for sale and figure they are about at a good price.
It might take a while to sell a house if it sells below the average price, but if we’re lucky, as conditions improve, we might see a reversal and see a surge in sales.
For now, we might see just about average growth in prices and average sales. Even an increase of 10 per cent in home price is a nice sweet spot and would present another profit opportunity for those who bought into the housing market in the past decade.