October 2009 Toronto Real Estate Market Reaches Record Heights
By Brian Madigan LL.B.
Here is the latest report from the Toronto Real Estate Board:
Summary Of Mid October Sales Volumes and Average Prices
Note: October 2009 are shown with October 2008 in brackets
City of Toronto(“416″)
Sales: 1,489 (1,140)
Prices: $455,001 ($375,804)
Rest of GTA (“905″)
Sales: 2,142 (1,560)
Prices: $386,311 ($337,671)
GTA
Sales: 3,631 (2,700)
Prices: $414,479 ($353,772)
That was the full TREB report. But remember, TREB compares statistics annually, while the actual factual information is available bi-monthly.
So, which way is the market going? Up or down?
For a correct answer to that question we have to look at the average price of a single family home in the GTA. As of 15 June 2009, three months ago, that number stood at $407,716. Until now, that had been the height of the market.
Let’s have look at the average prices over the last few months:
$406,877…..30 September
$393,818…..15 September
$385,978…..30 August
$383,796…..15 August
$395,414…..30 July
$394,750…..15 July
$403,972…..30 June
$407,716…..15 June
$395,609…..31 May
$385,601…..30 April
The average price now exceeds the previous June 15th high. This is now the highest average price ever reached in the history of the Toronto Real Estate Board.
What does this mean? Maybe nothing! Remember that TREB compares results annually, so that smoothes out the bumps over the long haul. The market is “up” from last year. But, this year, the market had been rising until June 15th, then it tipped over and had then been in slight decline until mid August. Since then, there has been a modest recovery.
It is also important to remember that average sale prices do not have the same meaning as the price of a stock traded on a public stock exchange. Each common share in a company is absolutely identical, so you can track the prices accurately over time. However when it comes to real estate transactions, we are simply talking about averages. No two properties are the same. Every property is different. So, the averages become more and more accurate with larger volumes. A yearly number might average out almost 100,000 properties, but a two week period may report only a few thousand. So, be careful in terms of over analyzing!
It is noteworthy that the overall sales volumes are now slightly ahead of last year. That means that deals are being done, and the demand is being satisfied. Going forward, there will be fewer buyers in the market. This, of course, means that there may be some excellent opportunities out there.
The annual highs are usually reached in May each year. Then there are cyclical declines in the summer months and a resurgence in the Fall. The October figures frequently match the Spring high. This may simply be in motion again.
At the moment, there is upward pressure on prices since there is a limited supply of listings. You have to remember that a lot of prospective sellers heard that the market was “bad” so they changed their plans. Decreased supply have turned the situation into a sellers’ market.
Interest rates have never been more attractive. A full 1 per cent rise is about a 33% increase in the mortgage rates. That would have a significant impact on rising prices.
Longer term, real estate has always proven to be a good investment.
Brian Madigan LL.B., Realtor is an author and commentator on real estate matters, Royal LePage Innovators Realty
905-796-8888
www.OntarioRealEstateSource.com
