I think that the worse may be over folks. After news of doom and gloom over the past twelve months or so, it seems like things are really picking up. I have been showing income properties to clients every day, so there is certainly no demand shortage. The real news though is that people are buying again. There isn’t this hesitancy of the sky about to fall so folks are no longer unnecessarily over-cautious. I have seen competing offers. I have seen triplexes being snatched up for the same prices as two years ago. I believe that the warm weather makes it easier for people to get out there, but it looks to me like in Toronto we’re back to a busy stable market.
On May 19, 2009 Greater Toronto REALTORS® reported 4,561 transactions in the first half of May – an increase of three per cent compared to May 2008.
“Members reported a rise in buying activity this month,” said TREB President Maureen O’Neill. “Many home buyers who were undecided about purchasing a home during the winter months are now proceeding with confidence as a result of the GTA housing market’s affordability.” The average price for MLS® sales was in line with last year, down by less than one-half of one per cent at $399,811.“More sales and fewer listings resulted in tighter market conditions which pushed the average selling price back up to last year’s level,” according to Jason Mercer, TREB’s Senior Manager of Market Analysis. “Look for new listings to increase as home owners react to the positive news surrounding home sales and prices.”
Are mortgage rates going to rise any time soon? I received an e-mail last week from a leading mortgage broker telling me to get my clients to get pre-approved now. 5 year fixed rates which are now at an all-time low are likely to start creeping back up soon. I believe that a lot of the activity that we have seen in the GTA over the past month has been strongly fueled by low borrowing rates. A lot of buyers thought that the sky was falling at the beginning of the year, figuring they had all the time in the world for prices to drop further. That hasn’t happened. Now many of these same buyers are realizing that a second window, namely low rates, may be closing soon too. If you can finance your income-generating property at a rate better than say two years ago, then many see this as a real fiscal opportunity. People locked in for five years at 5% (which historically is a very good rate) and now you can do the same term for up to 150 basis points less. That could translate into hundreds of dollars saved in interest payments per month.
I think it is safe to say that we are on the road to recovery and that the low lending rates that were intended to stimulate a softening market will rise sooner than later. Is this a temporary upswing amidst a much darker, longer drawn out economic recession? I think we’ll find out when GM finally declares bankruptcy, which could happen this week. After the dust settles, we’ll be able to fiscally plan for the future in a responsible way. I believe that the trajectory will be back to near high price and sales volume levels in the Toronto core. It seems like we’re there now and there might not be any looking back.