National Post - Posted Toronto
Posted: June 02, 2009, 6:47 PM
by Rob Roberts
Toronto’s real estate market has rebounded from dismal record lows, according to the Toronto Real Estate Board. House sales rose last month — up 2% from last May — for the first time since sales plummeted in the fall. Melissa Leong offers five things you should know:
1. It’s not just the usual spring thing. Will Dunning, a housing market analyst, credits the extra bump to lower interest rates, improved consumer confidence and pent-up demand. ‘‘It’s the flip side of a very negative confidence situation in the fall and during the winter,” he said. A lot of people put plans to buy property on hold, he said. “As confidence started to lift, those people who had paused became active in the housing market. The catching up for activity that didn’t happen last fall will unfold over a couple of months this spring.”
2. Fewer people are selling homes. The number of new listings in April dropped by 30%; in May, it fell by 27%. “Now there isn’t enough supply to meet the demand so we’re back in this multiple offer phase that we were at a year and a half ago. We’re getting bidding wars again,” said John Pasalis, a real estate broker and founder of the website, Realosophy.com. “I don’t think anyone predicted what is going on today.” Note that prices remained flat last month: TREB reported 9,589 sales in May, with an average selling price of $395,609. Last May, the average price was 1% higher at $398,148.
3. A heated market can make for frustrated buyers. “I find that it’s frustrating for a lot of buyers out there right now,” Mr. Pasalis said. “As soon as they see [a house] they like, it is sold within a day. When it is not sold in a day, they end up competing.” Agents will sometimes strategically under-price a property, he said. “They’ll take a house that’s worth $475,000 and they’ll list it for $399,000. It’s really a bad practice because you end up wasting a lot of people’s time who probably can’t afford the house. It ends up selling probably for pretty close to its true value but you end up dragging in six or eight buyers.”
4. This may not last. Jason Mercer, the real estate board’s senior manager of market analysis, expects the growth will continue into 2010, especially if the economy rebounds at the end of the year. Mr. Dunning is not so sure. “We have record low interest rates now. When there is a change in affordability, there tends to be a wave of housing market activity set off as a result. Those waves don’t tend to last very long – two or three months,” Mr. Dunning said. “From that point of view, market activity may be as strong as it is going to get right now.” Also, he added that a downturn in employment will eventually affect the housing market.
5. The GTA housing market has fared pretty well, considering. ‘‘The market in the GTA has proven to be pretty resilient especially after seeing the challenges in the economy,” Mr. Mercer said. “If you look at where we were at the end of 2008, we had started to see a slowdown in the housing market, we were stacking up pretty well price wise and sales wise in comparison to several U.S. centres. That speaks to the fact that the housing market in Canada has been fundamentally sound.”-->