The latest data from the Toronto Real Estate Board show that Toronto area home prices and sales are continuing to track well ahead of last year.
The average GTA price was $440,150 as of mid August, as compared with $412,186 for the same two weeks last year, and the inventory of homes for sale continues to be very low, at about 2.2 months’ supply. Anything less than 3 months’ supply is considered to be a “sellers’ market”. The graph below shows the trends in average selling prices in the GTA for the past three years.
Analysts, economists and media pundits have been warning for the last couple of years that real estate is overvalued in Canada, especially in hot market areas like Toronto and Vancouver. These warnings have been based mainly on the fact that house prices have been increasing more quickly than incomes, and that extremely low interest rates can’t last much longer. There is a very cool graphic in buzzbuzzhome.com that traces predictions about the Canadian housing market back to late 2009. Interestingly, many recent media reports are more upbeat than has been typical in recent months. For example, the headline in last Wednesday’s Toronto Star (normally a reliable harbinger of doom and gloom) said that “Eager buyers keep housing hot” and the article went on to say that experts are seeing Canadian real estate as an “oasis of stability” compared to the volatility in the financial markets. Looks like we’ll dodge the putative bullet for a while longer…
Assuming the present trends continue, we should expect to see a sharp uptick in prices and sales after Labour Day, similar to what was seen in 2009 and 2010 (see the graph above). The fall market typically accelerates through September and October and then slows down in mid-to-late November as the weather gets colder and thoughts turn to the holiday season. It should be a very good fall market for both sellers and buyers, with prices moving up steadily and mortgage rate increases on hold for at least the next few months.
Of course, a major global crisis, like the credit crisis in late 2008, would put a significant damper on the real estate market. I’m personally optimistic that we will avoid anything so catastrophic – but if it should happen, I’d say that a weak real estate market will probably be the least of our problems!
Looking to sell or buy this fall?
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