There have been 3655 sales reported for the Greater Toronto area in the first 2 weeks of February. In the City of Toronto (416 area code) there have been 1430 sales in the first 2 weeks and the balance of 2125 have been in the 905 districts. There have been 6212 homes on the market in the Toronto Real Estate boards boundaries as of the 15th of the month.
This is a 74% increase compared to the 2044 sales during the same period in 2009. There was a big dip in resales due to the recession.
The average price for mid February transactions was $429,997.00 an overall 18 % increase over 2009.
Keep in mind this is not a true 18 % increase as prices did dip roughly 13-14% at the end of 2008 to mid 2009 before they regained what had been lost and then added a few more percentage points. This was due to returned confidence in the economic conditions of our country.
The real estate market is important to job creation in Canada. It is estimated that every home sold generates on average an additional $46,000. in spending across many different sectors of the economy. This keeps many people employed in many real estate related fields including lawyers, home inspectors, retail stores such as home depot and contractors helping with renovation projects.
In January 4986 homes changed hands throughout the GTA. 1973 of these sales were in the 416 area and the balance in the 905 region.
Condo apartments made up 47% of all sales in the 416 area code in January.
This is in part because the largest segment of the market is the first time home buyer and they are generally purchasing under the $400,000. Mark. They can purchase a condo with a small downpayment and move in without requiring cash for renovations.
The 905 districts are becoming increasingly more desirable as the average price is about $40,000 lower than the 416 allowing first time home buyers to purchase homes rather than condos in many cases. These are often being bought direct from builders who are often helping with financing and many extras. For instance I was able to help my son purchase a home from a builder with a 3 year interest free loan. This allows them to pay of an extra $45,000 of principal in the first 3 years of ownership.
There are a couple of items that are driving price at the moment.
1/ is the interest rates which are threatening to go higher later in the year.
2/ is the lack of product on the market. Throughout all of the GTA in January there were just over 12,000 homes available in January. A year ago there was over 20,000 homes available.
3/ The coming of the rather onerous HST which kicks into place on July the 1st 2010. New Residences costing less than $400,000. Will effectively be exempt from the HST and there will be partial rebates on homes less than $500,000.
The immediate impact is that consumers will be paying more for a lot of items not previously taxed such as utilities and maintenance contracts imbedded in condo fees, legal fees and realtor commissions. This, together with any increase in mortgage interest rates, will reduce the number of buyers who can qualify in the second half of the year. Our forecast for is that 2010 will be the reverse of 2009 – strong first half, and lower second half!
In the downtown condo market, the sale-to-list ratio was 44% in January, down from over 80% at the end of last year and the number of new listings in February is accelerating. While multiple offers are common on well priced units in the popular price range ($300-450,000), more and more listings that are not priced right will sit in this market.
We also know that time is running out for sellers. The HST, coming July 1st, does not apply to resale housing but it will impact new sales coming after that date.
I believe we currently have the lowest inventory I have ever seen on the market during my real estate career.
We are looking forward to a climbing inventory in the spring as many folks are getting ready to put their homes on the market. This will help to stabilize prices and keep affordability in check. This is very important to sustaining a good healthy market. When the prices get way out of whack and affordability is gone the market slumps despite a healthy economy.
Rental Market
Rental prices are also holding steady with studios going for $1250, and one-bedroom units ranging from $1450 with no parking to $1650 for parking and a den. Two-bedroom units ranged from $2000 to $2500 for parking and a den. Three-bedroom units averaged $4500. Units are leasing for 100% of list price, on average and there has been the occasional ‘multiple offer’ situation as the vacancy rate for rental condos is still under 1%.
As always let me know how I can help. I can be reached at 416-462-1650.
If you have friends or business associates thinking of buying or selling I would much appreciate the referral.
Here is the link to our February online newsletter Newsletter
As always there are some excellent articles on renovation, Habitat for Humanity, banishing the winter blues and a couple of videos that you may find useful.
Best Wishes
Aeriol.