I don’t want to sound like a real estate agent or anything, but now’s the time to buy! I guess it seems like we’re always saying that, so it’s a bit of a “cry wolf” scenario when the market really does start to offer some opportunities. Well folks, the last few weeks have seen a lot inventory not sell, leading to the first in a series of widespread price decreases in the Toronto. This has allowed some buyers to purchase properties for up to 20% under list price. And this will allow all the income property buyers to start to take stock in the bottom-line numbers again.
Here are the facts:
Activity in the Greater Toronto Area resale housing market slowed down considerably during the first half of October with 2,700 homes changing hands. Toronto Real Estate Board announced that sales volumes in the GTA decreased 18% compared to the first half of October 2007, when 3,297 transactions were recorded and are down 10 per cent compared to the same period in 2006 when 3,007 sales took place. In the City of Toronto 1,140 sales took place in the first half of this month. This represents a 21% decline from the 1,446 sales that took place in the same period a year ago and a 13 percent decrease from the 1,312 transactions recorded in the first half of October 2006.
House prices declined throughout the GTA during the first half of the month. The average price of a GTA home is currently $353,772, down 11 per cent from $399,013 recorded the comparable period in 2007. In the City of Toronto the current average price $375,804, a 15 per cent decrease from the $441,878 average recorded at mid-October 2007.
Here’s how it all looks on a graph:
With 27,559 properties currently listed on the TorontoMLS system, there is now 30 per cent more available stock from which to choose as compared to a year ago when 21,182 homes were listed. This means more choice which turns into slightly longer wait times for sellers. Homes are now on average selling after 34 days on the market as compared to 26 days a year ago. This is quite a turn around from last year and should be encouraging for the buyers to say the least.
ELEASE FOR IMMEDIATE RELEASE
Some people say the media is helping to fuel this all along, but the numbers are what the numbers are. This is not a situation where the market is self-inflicting slowness upon itself because of what’s written in the papers. Others are still blaming the second land transfer tax. This might have been the case for a slow March but I don’t think this has far-reaching consequences. Real estate is cyclical – what goes up cannot keep going up forever. It’s just fundamental, so despite a global recession and our dollar going up and down like a yo-yo, the feverish real estate activity of the past few years had to subside.
Since a few folks have suffered paper losses this year, I have also seen income properties come up for sale so that the owner could offset any capital gains by their stock losses. Tax avoidance always makes sense but you have to ask if it is prudent to sell your building when the market is slower. A year ago, an income property in the Annex at $500K would have sold. Today it might not.
After several years of crazy highs, we are returning back to normal. The Toronto market will be more well-balanced. My opinion at a macro-level is that if Barak Obama wins the election next week, I think that will give a lot of Americans a new sense of hope, and these economic times will start to turn around. I’ve noticed that the advance polls for the election have been getting record breaking voter turnouts. Chalk one up for democracy! There are a lot of people that are going to get out and vote because they really want things to change, and change they will get. This is the exact flipside of our election, where virtually nothing changed at all. Well, I guess we’ll get a new Liberal leader down the line.
That’s it for this month. If you have been curious about the buying opportunities for buying duplexes & triplexes now that the market is cooperating somewhat, please do drop me a line.
Take care everyone,