John Pasalis in Toronto Real Estate News
A couple of weeks ago in a post titled What's Going on With Toronto's Real Estate Market?, I suggested that Toronto's real estate market is approaching a period that is somewhere between a boom and a bust. Sales may fall slightly from their record highs reached last year, but I don't expect to see anything remotely close to the housing crash in the US market. Instead, I suggested that supply and demand will be more balanced in the years ahead which will result in little to no appreciation in house values.
CIBC World Markets economist Benjamin Tal appears to agree. From a Globe and Mail article last week:
"It's the end of an era, if you wish," says Mr. Tal. "I think that the real estate market will be more boring for the next couple of years — which may be a good thing."
Mr. Tal says one key measure — unit sales as a share of new listings — is sitting at about 55 per cent right now. Last year, it was about 65 per cent.
A range of 40 to 60 per cent is considered a balanced market, and Mr. Tal expects to see Toronto sales remain in that range. In fact, the percentage will likely to fall to 50 per cent or so, he predicts.
"We expect it to go even lower." Still, Mr. Tal is not calling for a buyer's market any time soon.
Instead, he foresees a market where buyers will be able to take their time, have a house inspection done, and sit back from dizzying bidding wars. Mr. Tal forecasts that prices will rise in line with inflation of about 2 per cent.
"You won't have a situation where people are buying in panic."
Mr. Tal says the pent-up demand that drove the market in the past 7 or 8 years has been utilized.
For home buyers, particularly first-timers, a boring market is welcome news.
John Pasalis is a sales associate at Prudential Properties Plus in Toronto and a founder of Realosophy. Email John
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I think the Canadian real estate market is a bit different than the US market. Moreover, the US economy situation is much distinguished compare to the Canadian economy. Those factors influence numbers of sold houses in both countries. Toronto real estate market reached the top in past months. Nowadays, market numbers decreasing. All we hope that the Canadian real estate market will not follow the US housing market.
Posted by: West Toronto realtor | April 16, 2008 at 10:06 AM
As from my experience as a Vancouver real estate agent I would say that the real estate market is so unpredictable that it can always surprise us. However if the economy is stable the real estate market is balanced without any extreme rise or fall. What is happening now in the US is really remote to the situation in Canada however it doesn`t mean that a similar situation can`t occur here.
Posted by: Vancouver realtor | April 16, 2008 at 10:13 AM
As from my experience as a Vancouver real estate agent I would say that the real estate market is so unpredictable that it can always surprise us. However if the economy is stable the real estate market is balanced without any extreme rise or fall. What is happening now in the US is really remote to the situation in Canada however it doesn`t mean that a similar situation can`t occur here.
Posted by: Vancouver realtor | April 16, 2008 at 10:14 AM
boring is good! i have never, in my 27 years as a vancouver realtor, seen a market the likes of the last 4 years and it's time for it to settle down. unfortunately, many people are not familiar with all the types of markets and think hot sellers markets are normal. long term fundamentals are good - paying down debt, balanced budgets and we have lots of energy, resources and water! plus Harper's corporate tax reductions going forward. Canada will rock in the millenium....wish i was younger to take advantage of it!
Posted by: maggie-vancouverreflections blog | April 17, 2008 at 01:24 AM
There is a lot less duress in the Toronto market this spring and the supply of new listings and the demand from buyers is starting to be more balanced. As we move into a more balanced or "boring" market, as Mr. Tal puts it, it will be a great test for the majority of Toronto realtors. Anyone with less than 12 years experience in the industry only knows how to work a marketplace that has been heading straight up. Different tactics and techniques and much more patience is going to be needed to help people buy or sell their homes in a balanced market.
Posted by: Glenn Smith | April 22, 2008 at 08:55 AM