John Pasalis in Toronto Real Estate News
The Toronto Real Estate Board released their sales figures for the first half of May 2008 and the statistics continue to show a softer Toronto real estate market.
Some of the key numbers:
- Sales in the GTA declined 12% over last year
- Prices are up 6% over last year
- Inventory (number of homes available for sale) is up 11%
- Days on Market is up to 35 from 28 days last year
Here's a copy of the complete press release from the Toronto Real Estate Board:
Moderate sales and healthy price increases continued to characterize the GreaterToronto Area resale housing market during the first half of May, Toronto Real Estate Board President Maureen O’Neill announced today.
“With 4,422 sales throughout the GTA in the first two weeks of this month, activity has declined 12 per cent compared to the 5,003 homes sold during the first half of May 2007,” said Ms. O’Neill. “Prices however, continue to be strong, averaging $400,817 in the GTA, up six per cent from the $377,612 reported a year ago.”
In the City of Toronto, there were 1,734 sales, representing a 15 per cent decline from the 2,053 homes sold during the first half of May 2007 and an 11 per cent decline from 006. The average price in the 416 is $437,205, up six per cent from $412,701 a year ago.
In the 905 Region, there were 2,688 sales, down nine per cent from 2,950 a year ago but up four per cent from the same period in 2006. At $377,688, the average price is up seven per cent from the $353,192 recorded during the same timeframe in May of 2007.
Despite moderate sales overall, some neighbourhoods experienced heightened activity during the first half of May. The GTA is showing signs for a healthy 2008 compared to the diminished activity during the first quarter of 2008.
The Danforth (E03) saw sales increase 29 per cent overall compared to the same timeframe a year ago due to strong detached home sales.
Interest in detached homes also led Streetsville (W20) to a five percent overall sales increase compared to a year ago.
In the Annex (C02) transactions rose 39 per cent compared to the same period a year ago, driven by strong condominium apartment and detached home sales.
Richmond Hill South (N03) saw strong sales in most property types resulting in a three per cent increase compared to a year ago.
“In recent years, homebuyers have faced a major challenge with respect to limited selection,” said Ms. O’Neill.
“Now though, inventory is up 11 per cent compared to a year ago, which has resulted in more choice for home buyers and will a positive effect on the quality of available listings.”
A wider selection from which to choose has also resulted in increased Days on Market, which has risen to 35 from last year's 28.
“The Greater Toronto Area offers a wide array of housing stock to fit almost any budget; I encourage anyone thinking of making a move to contact their REALTOR® to learn more about all of their options.”
John Pasalis is a sales associate at Prudential Properties Plus in Toronto and a founder of Realosophy. Email John
Industry participants (aka The Real Estate and Indebtedness Mafia) such as the TREB willfully ignore and publically downplay what is going on. The mainstream media are their paid shills (grab a weekend paper and look at the percentages of advertising which is real estate or lender related!). Instead we should all worry just a little (but not too much) about...
a) the fact housing affordability is at its worst level since the last housing bubble burst [RBC. Housing Affordability. Mar-2009, p.1]
b) the fact that real housing prices have increased substantially more than during the last three housing cycles dating back 40-years (all of which ended badly) [Scotiabank. Real Estate Trends, 26-Feb-2008, p.2]
c) the fact that real housing prices in Canada have risen more from trough to peak than in the U.S., where prices and the general economy are now tanking [Scotiabank. Real Estate Trends, 26-Feb-2008, p.2]
d) the fact that Canada's housing prices-to-rent ratio is higher than in any other OECD country save Spain and 90% higher than the long-run trend [OECD Economic Outlook No. 82, December 2007. Data table can be found in the housing price ratio tab of http://www.oecd.org/dataoecd/6/5/2483894.xls]
e) the fact that Canada's housing prices-to-income ratio is 32% above historic trends and substantially above ratio which prevailed when the last housing boom bubble popped in the late 80’s / early 90’s [same source as (d)]
f) the fact that the unprecedented run-up in prices have been fueled by a proliferation of risky lending practices such as (i) a decrease in the required down payment from 10% to 0%, (ii) an increase in the allowed amortization from 25-years to 40-years, (iiI) the proliferation of 7% cash back mortgages and other lending gimmicks (teaser rates, step mortgages, skip a payment, builder rate buy downs, etc.), (iv) the proliferation of home equity lines of credit, and (v) lenders not being on the hook for the vast majority of risky loans they write (CMHC guarantees low-down payment and/or extended amortizations)
g) the fact that studies show typical consumers do not fully understand the implications and risk of low down payment, long amortization and gimmicky (e.g. 7% cash back) mortgages. How many consumers do you think have run a scenario analysis which asks, “what would happen if interest rates went to 8%, 10% or even 12%? What would happen if my partner or I lost our job? What would happen if real estate prices dropped by 10%, 20% or 30%? What impact will extending myself for this house have on my retirement plans?”
h) the fact that housing bubbles around the world are beginning to deflate. By way of example, the UK (admittedly a worse market then ours) mortgage lending in the first quarter is down 40% to the lowest level in 33-years and things are only beginning to get rolling there. In New Zealand housing sales are down 53% year-over-year. And we all can see what is going on in the U.S.
i) the fact that housing construction is far in excess of household formation. CMHC data shows housing starts averaging 226,000 units per year from 2003 through 2007, 33% per year above the roughly 170,000 net new households formed each year [as estimated by TD Economics and others]. Based on housing permits and starts, this trend is expected to continue well into the future.
j) the fact that Canadian MLS housing inventory is at record highs while at the same time the number of sales is dropping dramatically [Canadian Real Estate Association (CREA)]
k) the fact consumer indebtedness is at record highs relative to disposable income [Vanier Institute. The Current State of Canadian Family Finances. 11-Feb-2008. p.28]
l) the fact that savings rates are close to nil even though the baby boomers should be saving for retirement [Vanier Institute. The Current State of Canadian Family Finances. 11-Feb-2008. p.9]
m) the fact that Canadian incomes have stagnated. Statistics Canada recently reported "that adjusted for inflation the earned income of the ‘average’ Canadian -- the so-called median income - was the same in 2004 as in 1982”
n) the fact that the economy is bordering on a recession. The high Canadian dollar has pounded exports and the U.S., which absorbs some 70% of our exports, is likely in a recession. And what would happen if the rose comes off the construction and commodity bloom? Heresy I know, but both of these sectors are well above trend and are the only real source of strength in the Canadian economy.
o) the fact that inflationary pressures are building, raising the prospect of higher interest costs for borrowers.
I guess it is easier to put on our rose colour glasses, look in the rearview mirror and admire how pleasant the trip has been. Never mind the cliff dead ahead.
Posted by: Popper | May 20, 2008 at 10:18 PM
Real estate bulls and bears are about to have a tussle in TO.
It's the old chesnut:
Euphoric consumerism, immigration, speculation and dodgy financing tools vs. price cycle, global economics, demographics and buying-within-your-means home buyers.
Let's watch ...
Posted by: Rob M | May 22, 2008 at 02:07 PM