It's a wrap

Another year come and gone - The Toronto Real Estate Board (TREB)announced that 2010 ended up as the third best year for existing home sales... it was however not a typical year following traditional patterns for sales.

Following is a brief synopsis of the year just passed.

The December 2010 Market Watch from TREB Revealed a balanced market at year end. Prices overall in 2010 were up 9% compared to 2009. However we began the year generally up 20%, compared to the lows from the recession and generally ended the year up about 5% compared to year earlier periods.

Sales volumes were very high in the first part of the year with very low inventories. Sales volumes then tailed of dramatically during the summer as a result of mortgage rule changes, consumer concerns about increasing mortgage rates and confusion over the HST.

As fall approached it became clear interest rates remained at historic lows, that the HST did not impact the cost of buying in any substantial way and buyers returned to the market. The inventory of available homes remained steady but did not increase dramatically provinding an overall foundation for the market. As a result most of the fall was a balanced market with prices moving sideways and were generally 5% higher than fall 2009. Properly prepared, priced and marketed properties continued to sell, however by year end the Average days on market had increased to 37 from the year earlier period of just 27 days. With multiple offer scenarior's being the exception rather than the rule Realtor's and Sellers had to adjust their expectations on what and how long it took for even the best properties to sell.

Overall 2010 was an excellent year for real estate and has established a sustainable trend for the year ahead. Next post i'll offer up my thoughts for the year ahead and why the next couple of months may be the ideal time to sell.

Beautiful Balance

Earlier today the Toronto Real Estate Board released the Monthly Resale Housing Market Figures. The report confirms what I am experiencing on the ground. Essentially properly marketed properties that are priced correctly continue to sell. There is unquestionably less buyer traffic and it is taking longer to sell properties. However anyone who needs to sell - will sell - by hiring the right realtor, who implements a full marketing program and by being realistic about the price.

This is where the news is good. While prices are down from this years highs of March / Arpil and sales volumes are down 21% compared to October 2009, year over year prices on average are up 5% from October. At the end of the day the steam is out of the market, which in my view helps mitigate the risk of a bubble bursting, yet prices are holding because the market is in balance and prices remain relatively affordable.

Attention Buyers - Market update

With the release of September's market stats by the Toronto Real Estate Board we can better understand what the Fall is going to look like this year. Generally the market fared well. Admittedly things seem rather lack lustre based on the standard we have become accustomed to with properties selling like wild fire and bidding wars every where we look. As such it is easy for the Doom and Gloom crowd to suggest the sky is falling.

However in the context of a more "normal" market - the good properties professionally presented and well marketed continue to sell. They may not be selling in seven days for over asking, but they are selling. Certainly the first lesson from the data is it's generally not advisable to list low and seek to push the price higher, rather listing a little higher with room to negotiate would be more prudent.

So what do the stats tells us - Prices are up 5% from this time last year and sales volumes are down 23%. The drop in sales volumes might seem alarming but they are being compared to record breaking months in the market. As mentioned in earlier posts a slow down in sales in my view is healthy for the market and will help sustain the market over time. While prices are up from one year ago and in many Toronto Real Estate Board Districts prices are up from the average prices in January and February. They have however come down modestly from the market highs in March and April.
Here is a chart from District E3 that shows the average selling price by month - the chart included data for 2008, 2009 and 2010.

So where to from here? I don't of course have a crystal ball so like any prognosticator I can only predict based on the data available and what I am seeing and hearing on the ground in the market. My sense is that through the Fall period buyers will be more cautious and fewer in number, that properties will take longer to sell, and that properties that don't show well, are poorly marketed or even slightly overpriced will sit and be more difficult to sell. I also expect that prices will pull back a bit more, perhaps giving up the gains we had in the first part of the year.

At the end of the day I expect a balanced and more modest Fall - those who are buying will be able to get better value for their money. In fact I would suggest that this Fall is an excellent buying opportunity. For one you can likely avoid competition, secondly you will get more for your money and third there is more choice and finally interest remains near historic lows. Whether you are moving up or buying for the first time now is a great time to go. If you are looking to downsize it's more tricky to know whether to wait or do it now. As always I'm glad to speak to anyone about their very particular situation and help to explore the options and the benefits and risks associated with the different choices.

Fall not likely this Fall

What a glorious summer - the weather was great and the market was slow -ergo I actually had a relaxing vacation and chance to catch my breath and recover from an exciting and crazy busy year. Hope you also enjoyed the summer season.

Sales volumes were down substantially from year ago levels, though prices have held reasonably well in most area's. Sadly I have been reading many doom and gloom predictions for the market this fall, predictions I simply don't believe are likely to come true. Take comfort our Real Estate market is just fine and I believe very strongly it will continue to be.

It's a sure bet to predict this fall will see fewer resale homes sell than this past fall and of course this past spring, but to any informed person who watches the market this should come as no surprise. Sales volumes were not sustainable, nor do they need to remain at those levels to have a healthy market. In fact I would suggest those volumes are unhealthy for the market if they were to continue for too long.

So what was going on? With fear of increasing interest rates, panic over implementation of the HST, worries about changes to mortgage rules and of course a greater confidence in a recovering economy a lot of buyers rushed into the market late fall 2009, & winter/spring 2010, leading to record sales volumes and a strong rebound in average prices from a substantial drop during the recession. As a result some activity that may normally have occured this fall or was perhaps delayed due to the recession was effectively pulled forward, which will reduce volumes this fall. At the same time as the market got hot and the news got better a flood of listings came on the market in the spring 2010 taking the steam out of what was otherwise a very hot market.

With a strong increase in inventories as the spring market matured, combined with a slow down in summer sales volumes I would suggest that this is the healthiest development the market could experience. The sellers market has disappeared, as a result bidding wars are few and far between, and as a result prices have not been increasing as they were this past year. I don't subscribe to the idea we are in a bubble now, however another 12 months of a sellers market and 10% - 15% increase in prices and I'd be very concerned.

The numbers currently suggest we are generally in a balanced market which means moderate to no upward pressure on prices and properties will take longer to sell. Ask anyone who was trying to buy in the sellers market - sounds like heaven for buyers. At the same time sellers who prepare their property properly, select a competent hard working real estate agent and that price their property based on realistic market values will have no difficulty selling. They may not get 5 offers and sell for 10% over list, but they will sell, likely withing 30 days and for a good price. The properties that won't sell are the ones that don't show well, have poor marketing programs or are overpriced. It's times like these that a good realtor is worth their weight in gold.

Generally I am optimistic for the fall market. It is possible we will see some price pull back, and prices have come off the March/ April peak already, but I suspect it will be modest and short lived. So if you have been thinking of buying, this fall may present a great opportunity to avoid competition and get good value for your money. If you are up sizing, down sizing or are ready to sell the sky is NOT falling and with the guidance of a competent professional working in your best interests you will sell and for a good price.

To close I was pleased to read the Conference Board of Canada's commentary on the real estate market released September 7th entitled "Is this the beginning of a Free Fall for the Housing Market", I won't rewrite the article here as you can click on the link and check it out yourself, rather let me just say it was nice to read something that offers a bigger picture perspective and had some balance to it. Perhaps I am biased to agree with the author as their position is and has been my own for some time. My experience on the ground very much supports their broader perspective. Just 2 weeks ago I listed a million dollar plus home and had 8 offers on it after 2 days on the market - this is not indicative of a falling market.

As a final caution be mindful that real estate is a very local market place that is very dynamic. If you are considering buying or selling consult with a competent and knowledgeable professional to understand what is happening in you area in the hear and now.

Interest Rates on the way up... Early?

Media sources have reported that Mark Carney governor of the Bank of Canada has indicated that inflation and the economy are rebounding more quickly than expected. As reported in the Toronto Star "Higher Interest rates on way - March 25th" he has the option of hiking rates sooner than expected should the Bank of Canada feel this necessary. The Globe and Mail article "Mark Carney mindful of hotter inflation" suggested that the "Bank of Canada governor's comments increase odds of an interest rate hike within next few months.

The Bank Governor has reiterated that the committment to hold rates through June 2010 was always conditional on inflation remaining within an acceptable range. So we await the next Bank meeting on Tuesday April 20th to see if they will indeed move rates up ahead of the anticipated time.

Rates will increase the interest rate charged, and thus the interest payable, on all variable rate mortgages. Further a rate hike will put upward pressure on fixed rates. In both cases this will increase the cost of homeownership and decrease affordability.

Toronto Real Estate Market Watch - February 2010

Earlier today the Toronto Real Estate Board released it's February 2010 Market Watch. While it appears a strong sellers market remains both in the data and on the ground, in following market news and studying more local real estate market data i've noted some signs begining to appear that change may be coming to the market this spring. For today i'll offer up a quick summmary of the February report but am working on a post that speaks to these signs.


First though some of the high level numbers, Overall the volume of available listings in the Greater Toronto Area was 32% lower in February 2010 than February 2009, this compares however to 42% lower inventory in the January 2010 report. In other words while inventory remains tight in the early going the gap is getting smaller.


Secondly the average price of a residential resale home in the Greater Toronto Area was up 19% year over year. While this is an incredible rebound it's important to note the comparison month of february 2009 is an average price stemming from a recessionary buyers market with dropping prices. The 19% increase however still represents an increase over pre-recession average prices


The third note is that sales volumes were up a staggering 77% compared to the same time last year and the volume of new listings was up 24%, again a substantial number, but with recessionary data as the comparison year.


These regional numbers are interesting high level notes but of course real estate is a very local market where values, conditions etc can change city to city, neighbourhood to neighbourhood, and even block to block based on a myriad of variables. In two East Toronto Treb Districts that I follow the year over year price increases were 21% and 22%, substantially above the market average 19%, while another was well below this at 6.77%.

This is part of what makes real estate so fascinating and perilous to navigate without expert guidance... We often don't know what we don't know and over estimate our level of knowledge whic of course can negatively impact our decisions and the resulting outcome. Competent realtors understand how important and dymanic local market conditions are and the many pieces of data that affect them today and into tomorow.

If your interested in the specific conditions that exist in your area and how this might affect your plans drop me a line and we can chat....

Interest Rates on the rise later in 2010?

Yesterday the Bank of Canada announced that is was going to maintain the banks overnight rate at current levels. The release further indicated that they expect to continue to conditionally hold the overnight rate at current levels until at least the end of the second quarter.


However as noted in the Toronto Real Estate Boards economic commentary on the announcement better than expected economic performance and other positive factors lead to anticipation that the Bank of Canada may begin to raise rates in the second half of the Year. If so this will of course increase the cost of borrowing and could begin to modestly impact the demand side of the Real Estate Market.


Rising interest rates is one of a number of data points i'm currently watching to get a sense of where the market might be headed... i'll have more to say on that very soon.

Note: that interest rates do fluctuate up and down based on other market conditions but do tend to follow the Bank of Canada's overnight rate in terms of overall direction. If you are interested in know the best going rates today you can contact Mary McCreath of Mortgage Intelligence for an update on current rates.