The Toronto real estate market started 2011 with 4,337 residential properties sold in January, 13% below January 2010's all-time high. New listings declined 10% from the previous year, leading to low housing inventory. Desirable homes received multiple offers. The average sale price rose 4.5% to $427,037. Restrictive new lending policies and expected interest rate hikes will likely spur short-term buying activity and push prices higher before moderating later in the year.

1. Toronto Real Estate Market Report
January 2011
The first month of 2011 started well, reporting 4,337 residential resale properties. Although this
number is 13 percent below the 4,986 properties reported sold in January 2010, it must be
remembered that last January’s results represent an all time high for reported sales by the Toronto
Real Estate Board. By historical standards the 4,337 reported sold for this January represents a very
solid start to the year.
Market patterns that developed in the last half of 2010 persisted into the first month of this year.
Only 9,008 new listings came to market. This represents a 10 percent decline compared to the 10,021
new listings that came to market in January 2010. As a result, heading into February there were only
12,152 available properties for sale in the Greater Toronto Area. Although this number is comparable
to the 12,052 available properties at the beginning of February 2010, by historical comparison the
available inventories are low. Even by using January’s sales, the available inventory in Toronto is less
than three months, and January is a month (aside from December) that normally produces the lowest
number of reported sales during the year. It is not surprising, therefore, that desirable, well priced
properties attracted double digit multiple offers in January.
As compared to January 2010, Toronto’s average sale price of all properties sold strengthened this
month. Last January the average sale price was reported at $409,058. This January the average sale
price came in at $427,037, an increase of almost 4.5 percent. Expect the average sale price to rise over
the coming months.
The performance of all of Toronto’s trading areas was fairly consistent with the overall market. As
compared to last January, sales were slightly down, new listings coming to market were down, and
available inventories heading into February were marginally less than available inventories at the
same time last year. The only exception to this pattern was Toronto’s central districts. Whereas the
north, east and west trading areas had slightly less inventory than January 2010, Toronto’s central
districts had 22 percent more inventory than last year. The bulk of this inventory is to be found in
downtown Toronto, along the waterfront and west of Yonge Street. It consists predominantly of
condominium apartments. For the most part they represent investor units in projects that are now
registered and now on the market for sale. For example, the number of downtown condominium
apartments for sale in January represents an amazing 33 percent of the entire central trading area
inventory. The central trading area begins at the waterfront and extends to Steeles Avenue.

2. There are a number of economic factors at play that will have an impact on the Toronto resale market
both in the short and long term. In January the Federal Finance Minister announced further
restrictions on Canadian institutions’ lending practices. The most important change is the
amortization period available to Canadian borrowers. After March 18, 2011 borrowers will no longer
be able to choose 35 year amortization periods. The maximum amortization period has been reduced
to 30, making it more difficult for some buyers to qualify and meet their monthly mortgage interest
service costs.
It is now almost a foregone conclusion that mortgage interest rates will increase in 2011. In fact as this
market report was being prepared the major banks announced a quarter point increase in their rates.
The combined effect of more restrictive lending practices and the threat of rising interest rates will
cause a spike in buying activity in the early part of this year. This is reminiscent of last year, when the
implementation of the Harmonized Sales Tax and the earlier round of more restrictive lending
practices caused a frenzy of buying which lasted until June. The impact of these market factors is
likely to result in a significant rise in Toronto’s average sale price, as buyers scramble to lock into low
interest rates and for the time being, the availability of longer amortization rates. This trend will
change as we move towards the second half of 2011, when average sale prices are expected to be
moderate and even flat line.
Prepared by Chris Kapches
Senior Vice President
CHESTNUT PARK REAL ESTATE LIMITED 416.925.9191
NicoleLehoczky@chestnutpark.com www.NicoleLehoczky.com