John Pasalis in Toronto Real Estate News
In August 2008 we ran a poll on our blog asking readers if Toronto would be spared a major real estate correction. The Bears won the poll with 73% answering “Smart home owners should sell their houses now and start renting”.
A lot has happened since last August. From October 2008 to February 2009, the peak of the financial crisis, real estate sales plummeted by almost 50% in Toronto with prices declining by as much as 10%. A period with too many sellers and not enough buyers is very characteristic of a declining real estate market.
Since then we’ve seen a dramatic turnaround in the Toronto market. We moved from a strong Buyer’s market in the winter to a strong Seller’s market in the spring. Today, the demand from buyers outweighs the supply of homes from sellers and as a result we are seeing bidding wars for many Toronto homes.
In May 2009, real estate sales increased by 2% over the previous year, the first increase since December 2007. I expect to see a double digit increase in sales for the first half of June 2009.
With sales clearly on the rise and bidding wars on many Toronto houses are the economists right when they say that the worst of Canada’s real estate slump is over?
Related Posts
Toronto Real Estate: A Seller's Market
John Pasalis is the Broker owner of Realosophy Realty Inc in Toronto. Email John
Hi John,
Yes, the market is definatly back. Here are the numbers for sales over a million in May 2009, exceeding the last record of May 2007:
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Top 10 Months for Luxury Sales over $1 million
Rank No. of Sales Month/Year
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1 273 May-09
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2 266 May-07
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3 262 Apr-08
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4 258 May-08
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5 256 Jun-07
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6 252 Oct-07
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7 238 Nov-07
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8 237 Apr-07
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9 227 Jun-08
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10 221 May-06
Luxury home sales hit record high in Toronto in May
http://toronto.ctv.ca/servlet/an/local/CTVNews/20090612/toronto_home_sales_090612/20090612?hub=TorontoHome
May 2009 strongest month on record for luxury home sales, says RE/MAX
http://www.newswire.ca/en/releases/archive/June2009/12/c5752.html
Posted by: Guru | June 17, 2009 at 10:34 AM
Unemployment in the GTA is high and still increasing. The only thing fueling this RE surge are low-interest mortgages. What happens when mortgage rates go back up to 7-8%?
Posted by: Jordan | June 17, 2009 at 10:47 AM
Jordan,
Bank of Canada said they will keep the interest rate at 0.25 per cent until at least mid-2010. No way they are going to 7-8% any time soon.
Posted by: Guru | June 17, 2009 at 10:59 AM
Umm... House prices blipped higher in the spring. Big surprise. There is a lot more recession to come, and if it is anything like the last two, expect the bottom to be in 2112 for house prices. "History doesn't repeat itself, but it rhymes."
Posted by: jameasmallon | July 02, 2009 at 04:36 PM
Since moving to Toronto, I've never seen a buyers market. As one who makes over 100k a year, I can not enter the market for a house here. I am priced out of everything but the bottom third on the fringes. I am renting until after this mess corrects itself properly. Recessions are supposed to push prices down, but I've not seen that at all. All signs point to increasing prices. Ask yourself — why?
It seems the real-estate industry and banks together are trying their damnedest to prevent a proper correction by holding inventory off the books and promoting too-good-to-be-true mortgages, along with parading the marginally better numbers produced by these schemes as evidence of a turn-around.
I saw a sign just yesterday for a 1% mortgage (you better believe there were asterisks on that sign!). If the market is so good, why are banks giving away loans like this? It seems people are just taking advantage of cheap loans, not knowing that many of the houses in a neighbourhood are in fact empty, being held by the banks. Had these additional houses all been available, prices would have come down, and our city more efficiently utilized.
We're going to pay for this prolonged buyers market sooner or later. I'm curious to see what form restoration will take.
Posted by: Christopher Lord | September 23, 2009 at 04:39 PM