John Pasalis in Toronto Real Estate News
The average price for a home in the city of Toronto dropped 6% in September, the sharpest price decline we've seen in over ten years.
The average sale price dropped to $393,647 from the September 2007 average of $420,182. During the first half of September prices were relatively flat compared to last year which means that the entire decline in September occurred in the last two weeks of the month. I suspect that the negative economic outlook due to the financial turmoil in the US was certainly a factor in this decline. It will be interesting to see how US markets react over the next month as Treasury Secretary Henry Paulson puts the $700B bailout into action.
Prices remained virtually flat in the 905 region and prices in the Greater Toronto area dropped by 3%
Sales in the GTA were down just 6% to 6,424 in September, a moderate decline when compared to the 14% drop in sales year to date.
It's interesting to note the striking difference in sales and price declines between the city of Toronto and the 905 region. Prices dropped 6% in the city of Toronto while remaining flat in the 905 area. Sales declined by just 3% in the 905 area compared to an 11% drop in the city of Toronto. These results are consistent with a trend we've been seeing between these two regions for most of 2008.
The Toronto Real Estate Board has long argued that the city of Toronto land transfer tax would impact real estate sales in the city. I was a little reluctant to accept this assumption at first but the sales data for this year is showing some significant differences between the two regions.
What are your thoughts? Do you think the city of Toronto Land Transfer tax has impacted sales in the city of Toronto? If not, how would you explain the significant difference in sales and prices between the two regions?
You can read TREB's complete press realease here.
Download September's Market Watch report here.
John Pasalis is a sales associate at Prudential Properties Plus in Toronto and a founder of Realosophy. Email John
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You think maybe the average price didn't drop, but there were fewer sales of expensive homes? You really ought to pay attention.
Posted by: Ran Sibble | October 04, 2008 at 05:55 AM
Thank you for your insight Ran,
It's interesting to hear that you agree that the land transfer tax has slowed down sales of more expensive homes, the ones more likely to be impacted by the new tax.
Posted by: John Pasalis | October 04, 2008 at 08:20 AM
I agree that the Toronto land transfer tax has put a chill on the local housing market, particularly for people on a budget looking to buy in the lower price range. At the same time, a constant barrage of negative headlines about the impending economic apocalypse (exaggerated for Canada) have kept would-be buyers on the sidelines waiting to catch a deal as prices drop. My prediction is that there will be a siginficant 10-20% drop in sales activity over the next 6 months to a year. However, taking into consideration the undervalued (in international terms) market in Toronto overall, and with international investors looking to put cash into a relatively stable market, Toronto is a good bet to bounce back quickly. In fact, I would look for at least some of the bleeding to stop after the Federal, and especially the U.S. elections.
Posted by: Nick | October 05, 2008 at 01:54 PM
ouch!
6%!! It's very big!
I have a few friends who bought condos as investment who are now selling it.
Parents who rented their investment condo to their daughter now kicking her out and selling the condo...
A whole lot of people who were convinced the Toronto real estate market could only slow down but never drop are now falling off their beds and waking up and rushing out to their real estate agents.
October might be far worse.
You think October will be a run at the bank?
Posted by: Patrice | October 06, 2008 at 09:59 AM
Yes, October will be worse. We are seeing a trend. August was 1% drop, September was 6% drop and October will be about 7-10% drop in my opinion.
Anyone that knows anything about Real Estate Cycles knows the BOOM/BUST cycle, and usually the BUST cycle takes years to play out.
Posted by: Don't Buy It | October 07, 2008 at 08:11 AM
Last month you supplied a great breakdown by neighbourhood. Would you be willing to do the same again, or point us in the right direction to do it ourselves?
Posted by: Joshua | October 07, 2008 at 11:26 PM
Hi Joshua,
Here you go!
http://realosophy.typepad.com/MarketWatch/Sept2008SalesAnalysis.xls
Posted by: John Pasalis | October 08, 2008 at 07:01 AM
Thanks so much!
Posted by: Joshua | October 09, 2008 at 08:41 AM
I don't know anything about the tax, but in Vancouver (where I haven't heard of a similar tax) prices are also falling faster in the metro region (as well as wealthy West Van) than they are in outlying areas (the Fraser Valley). So maybe there is something else underlying the trend.
Posted by: Anonymous | October 09, 2008 at 06:33 PM