Friday, January 15, 2010
The Real Estate Market in Toronto in 2010!
Don’t believe everything you read without really examining it first!
For example, you have no doubt seen reports of Toronto real estate prices rising 17% in the month of December alone, of year-to-date transaction numbers increasing by 16% and of multiple offers becoming the norm instead of the exception. While all these statements are true, in reality, they are not a cause for alarm – “A bubble, a bubble!” – or rejoicing – “Another Boom!”
It is important to remember that the Canadian real estate recession was generally considered to have started in October 2008. In that month alone, the Toronto Real Estate Board reported that GTA sales were down a whopping 35% and prices declined 13% over the same period in 2007. However, due to our stringent mortgage regulations, we did not experience the virtual destruction of the market that sent our neighbours to the south reeling. We did experience a very short-lived, but deep decline over a six month period. Hence, the beginning of 2009 began slowly but thankfully, ended with what some would consider a full recovery. The robust price growth that we experienced in the latter half of 2009 was a direct result of a diminished listing inventory, coupled with an increased demand due to the low interest rates.
Therefore, the truth behind the headlines, when we consider the statistics in context, is that the 2009 results are in line with the healthy levels of sales experienced between 2004-2007. Real estate, once again, seems to be the engine that is powering the economic recovery of the country. On average, every house sold provides ancillary spending of approximately 47,000 dollars.
So, what does our crystal ball say about 2010? “A greater supply of listings in 2010 will see home prices grow at a sustainable pace,” says Jason Mercer, Senior Manager of Market Analysis for the Toronto Real Estate Board. This is very good news for us all, no bursting bubble and a less frantic pace.
What should we watch out for? First, Finance Minister Flaherty’s musings about slowing down the market with increased minimum down payments. One would think that any sector that is creating jobs should be nurtured not monitored. Secondly, slight increases in mortgage rates, I strongly encourage my clients to lock in their mortgages with a 25, rather than a 35 year amortization. This conservative approach will prevent the destructive results of mortgage rate roulette! And last but certainly most impactful, blended HST. While this extra 8% tax will not come in to effect until July, it will have a very detrimental impact on our industry. This is an extra 8% on all your legal, moving, commission and renovation costs, not to mention an extra 8% on all condo fees.
My recommendation? BUY NOW and most of all SELL NOW! If you are considering a real estate move, whether buying or selling, the sooner, the better. Do not hesitate to call me to discuss your real estate portfolio.