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.

Summers Here!

It's mid June and I have had a very busy and productive spring having helped many buyers and sellers. The market also has come a long way since this time last year with prices on average up 13% since May 2009. Interestingly my client roster is a fair bit thinner for this point in June than is typical. Not that I'm complaining, as we have been on a torrid pace since the beginning of the year. A lighter work load allows me to catch my breath and reflect on the past few months and look ahead to those to come. Of course if you know anyone ready to buy or sell - be sure to send them my way...

Looking at the market data my client load seems consistent with what is happening in the broader market. It was interesting recently to chart out for a client the past five months of market activity as reported by the Toronto Real Estate Board (TREB). We entered the year with the inventory of available homes in January being 41% lower than the previous year and sales up 87%. At the end of May the Inventory of available homes was 18% higher than the year earlier period and sales were down 1%. It is important to note that Sales remained strong and it is the inventory side of things that has cooled the market to some degree. Ultimately the steam seems to have come out of the market and there is a return to a more reasonable and measured pace which is very healthy in my view.

This month so far sales volumes seem to be at a slower pace and some would suggest this is further evidence of a real slow down. I don't disagree, however I think what is happening is an early transition into a summer market where buyers are fewer and homes take longer to sell. I don't believe we are in for a broad pull back in the market as some have speculated. Tom Lebour the president of the Toronto Real Estate Board noted in the May Market update that a lot of people advanced their plans to stay ahead of expected rate increases... so it only follows that things will slow down for a short time now that the first rate hike has come and gone.

However given interest rates remain at historically low levels, the economy shows continued signs of strength (particularly in Ontario) and the employment rates have stabilized and have started to rebound I fully expect a healthy fall market. That being said I don't expect (and frankly hope we don't experience) a return to a sellers market with bidding wars as the norm. Rather I think we will see lower but healthy sales volumes and a good inventory available to absorb the buyers - I expect prices to move sideways at best and we may even experience a very modest pull back in prices with a return to modest appreciation in 2011. At the end of 2010 I do expect average prices will be up overall.

If you have any questions about current market conditions or Real Estate in general don't hesitate to reach out.....

Market Shift - Don't despair its a good thing!

It's been some time since my last post, while I want to get good information out there to you, client service must always come first... and there has been a lot of client service of late. It's been a busy 6 weeks and I have another busy 6 - 8 weeks ahead of me. I'm working late tonight to get this post up as the market shift that I've been anticipating and seeing signs of for some time has finally happened and at the very least I want this information out there accessible to all...


Now sellers don't despair, there are still lots of buyers out there ready to pay a fair price for a good property, though admittedly the top of the market in the short term was likely in late March or early April. That being said just this evening I sold one of my listings, a great downtown condo with two offers and we pushed the price up $5800... so I'm pleased to have another happy seller. I sold another listing last week, could potentially sell another tomorrow and the traffic has generally been good at all but one of my listings.


Buyers..the time has finally arrived where you don't necessarily have to duke it out to get a great property for a fair price. Last night, for the first time in quite a while I had a buyer actually purchase a property without competing and we negotiated almost $15,000 off the list price. A refreshing change from what otherwise seemed like a steady diet of multiple offers and competition. I have definitely noticed a lot of good properties with offer dates that didn't receive offers on the anointed date. This is a clear sign that buyers are regaining some of the negotiating leverage. I do hope this continues for the foreseeable future.


For those of you who already own and plan to stay, or have been thinking about moving to a new property this shift is good for you as well. The market has climbed a lot in a very short time. I believe this climb is all based on good fundamentals and is in large part a recovery from the recession and thanks to the excellent interest rate policies of the Bank of Canada. If we continued at the pace we have been on a real estate bubble could very well have formed which then risks another real estate downturn. Many analysts have been sounding the alarm bell on this front, but generally I think the current shift will reduce the risk of too much too fast. This balancing out will moderate price appreciation, make it easier for people to buy, and yet sellers can still sell their properties with healthy demand. I expect that the next 6 months or more will be steady and measured which is good for the market overall.



So just what is happening out there? Ignore the noise on the HST and rising interest rates, yes these have some impact but the real story is Inventory and the supply and demand curve, which is so influential on market behaviour and direction... Essentially the inventory has finally rebounded to take some of the steam out of the sellers market. The Toronto Real Estate Board (TREB) reported that a stunning 20,683 new listings came on the market in April, this represents a 59% increase in available listings. This is nearly 10,000 more new listings than properties sold. This dramatic increase in listings has shifted the balance in the market from one that clearly favoured the seller, to one that is more measured between buyers and sellers.


At right is a chart from one of the many TREB Districts that I follow closely for my clients. I chart a wide variety of market statistics to understand where we have come from to identify trends and emerging trends. Quality data helps to inform decisions and improve outcomes. This chart compares listing statistics for 2010 to those in 2009. Essential we see whether solds, new listings and available listings are higher or lower than the year before period, and this is charted by month so we can identify market trends and directions. From this graphic, which looks very similar for many TREB districts we see that sales have remained generally higher than 2009 from January through to April, but not dramatically so. The inventory of available homes on the other hand remained substantially below last year levels and only in the past two months has the volume of new listings increased to well above last years levels ultimately bringing the overall inventory of homes higher as well.

In conclusion the market has shifted and this is good for all players - sellers can still sell, buyers have more choice and value should be protected with a steady market for the balance of the year.

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.

Consumer Confidence Hits 2-year High!

The Index of Consumer Confidence rose 13.8 percentage points in January to a 23 month high, according to the Conference Board of Canada's latest Index of Consumer Confidence. The index is over 40 points higher than it was one year ago suggesting Canadians are seeing a light at the end of the recession tunnel. In Ontario, an increase of 12.3 points in January boosted confidence in the province to 93.7 - more than double its December 2008 level of 45.9. To see the full report, visit www.conferenceboard.ca.

Harmonized Sales Tax - Reality check

Okay i'm no tax expert, but lately i have had a lot of questions and comments directed my way that indicates the new Harmonized Sales Tax (HST) is not understood by consumers. I cannot answer a lot of detailed or complicated questions on the subject, but I can dispell a couple of common myths I have been coming across.

First - Residential resale houses and condominiums in Ontario and Toronto are NOT subject to the new HST - check out the Government of Ontario site to confirm this and other important facts. Second - Newly purchsed homes and condominiums ARE subject to HST, though there are some complicated change over rules and helpful rebates that take some of the sting out of the change. If buying new check in with your lawyer and or accountant to make sure you understand how this tax change will affect you.

The primary impact buyers and sellers of residential resale properties will experience are the services they must purhcase to support their real estate needs will now be taxed at a higher rate.

For example home inspectors, lawyers, home stagers, and realtors all must add the HST to our bills, an additional 8% above and beyond the current GST... so yes it will hurt to some degree but it could have been a lot worse... when buying the HST may add between $100 to $200 to the purchasing costs. For sellers the sting is a bit more as the Realtor Fee's are the most expensive selling cost and this could add anywhere from $1000 to several thousand dollars depending on the price of the house.

If you have detailed questions about the HST, especially if buying new or if you are a builder or investor, I recommend you speak to your accountant or your real estate lawyer.

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....