Toronto Real Estate and Neighbourhoods Blog | Move Smartly

Repeat Buyers Lift Toronto Real Estate Market to Record Heights in 2007

John Pasalis in Toronto Real Estate News

Earlier this week Realosophy.com released their first Quarterly Move Smartly Housing Report to subscribers. 

The Realosophy team is obsessed with analyzing Toronto real estate data and we love looking for micro trends within this data.  In the same way Calgary’s real estate market is different from Toronto’s, we believe that the real estate markets in two different neighbourhoods within the same city can be equally different.  Every neighbourhood has its own set of factors that influence sales and prices.  Only by looking at Toronto real estate sales at the more granular neighbourhood level can we begin to see these micro trends. 

We decided to launch our report with a summary of sales for 2007.  We will soon follow this up with first quarter results for 2008. 

The fascinating story we found for 2007 was that the repeat buyer market propelled Toronto’s real estate market to record heights.  This is interesting because the common assumption, and fear, among most industry watchers was that the 40 year mortgage propelled more first-time home buyers into the market, pushing the market to record heights.   From the report:

How Important is Parking to Toronto Condo Buyers?

John Pasalis in Toronto Real Estate News

There were a couple of interesting stories in the press yesterday.  The Toronto Star reported on a TD survey that found 71% of condo buyers would not buy a particular condo if it had no parking.  In contrast, the National Post reported that "young condo dwellers are ditching their cars to spend more on the finer things in life"

So which is it?  Are condo buyers still insisting on a parking spot or are they ditching their cars for the finer things.  My personal experience has been that many buyers are more willing to part ways with their cars.  Services like Autoshare and Zipcar have made living car free much easier.

What are your thoughts?  Would parking be a deal breaker for you or your clients?

John Pasalis is a sales associate at Prudential Properties Plus in Toronto and a founder of Realosophy. Email John

Subscribe to the Move Smartly blog by email

Toronto Real Estate Prices and Inventory Rise In April

John Pasalis in Toronto Real Estate News

The Toronto Real Estate Board released their sales for April 2008.  It wasn't much of a surprise to see that sales declined 7% in April over the same time last year.  The average home price for the GTA in April was up 8% 5% over last year and the number of homes available for sale increased by 7%.

Correction(May 5, 2008): An astute reader pointed out that TREB made a mistake in their recent press release.  Prices in the GTA rose by 5% in April, not the reported 8%. 

It was interesting to see that sales in the City of Toronto were down 10% compared to a 5% slowdown in the 905 region.  It appears as though TREB is slowly building their case against the City of Toronto land transfer tax.

Download the complete Market Watch report here.

Here are the latest numbers from the Toronto Real Estate Board:

Forecasting Toronto’s Real Estate Market a Tricky Business

John Pasalis in Toronto Real Estate News

Last Friday I was invited to answer questions about Toronto’s real estate market in a live online discussion on globeandmail.com. I enjoyed the format because it allowed me to briefly touch on many of the issues that have been on my mind lately.

One issue I have been meaning to write about was raised by a reader named Marg who pointed out that economists and experts have been forecasting a slowdown in Toronto’s real estate market for years, but prices continue to rise. This of course raises a couple of important questions. Firstly, why have economists and experts been unable to accurately forecast Toronto’s real estate market, and secondly, why is this forecast for a slowdown any different from previous forecasts.

Toronto Real Estate Sales Rebound in the First Half of April 2008

John in Toronto Real Estate News

Resale home sales in the Greater Toronto Area  are down 5% in the first half of April compared to the same period last year.  This is an increase over last month which saw a 22% decrease in sales volume when compared to March 2007.

Prices increased by 7% over the same period last year.

Here are the latest numbers from the Toronto Real Estate Board:

The Greater Toronto Area resale housing market saw 3,955 homes change hands in the first half of April, down five per cent from the same time period last year, Toronto Real Estate Board President Maureen O’Neill announced today.

“The first half of April brought sales activity within five per cent of mid-April 2007,” said Ms. O’Neill.

In the City of Toronto sales are down 11 per cent compared to a year ago, with 1,514 transactions taking place. Inthe 905 suburbs, sales are down just over one per cent to 2,441 for mid-month April 2008 from 2,477 sales midmonth April 2007.

Throughout the GTA prices have risen seven per cent compared to the same timeframe last year, to an average of $399,117. In the City of Toronto the average stands at $454,211 up 10 per cent over mid-April 2007. The 905 Region has seen a six per cent increase compared to a year ago, with a current average price of $364,939.

Toronto's Real Estate Market - Boring for the Next Couple of Years

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

Subscribe to the Move Smartly blog by email 

Related Posts:

What's Going on With Toronto's Real Estate Market?

Is a 40-Year Mortgage Hazardous for your Financial Health?

John Pasalis in Money, Home Buying Tips

Last week, the Toronto Star’s Ellen Roseman wrote an article titled 40-year Mortgage Comes with Hidden Hazards. On Move Smartly, we often try to pick up where the main stream media left off.  Instead of just telling readers the 40-year mortgage is bad for their pocket books, we try to give practical advice that addresses the needs of today's home buyers.

Let me start off by saying that a 40-year mortgage is not for everyone. Anyone who qualifies to buy a home with a 25-year mortgage but opts for a 40-year mortgage instead because it leaves them with a little more spending money in their wallets is downright foolish. If you want more spending money in your pocket, spend less on your home - don’t get a 40-year mortgage and pay more interest over the life of that mortgage.

Having said that, does this mean that a 40-year mortgage is wrong for all home buyers? Is a 40-year mortgage like long term renting? Not quite.

Unlike Roseman, many of today's first time buyers are not buying their first home with their partners and therefore don’t have the luxury of counting on a second income to help pay their mortgage. Last year, the Toronto Star reported that single women account for 20 per cent of Toronto's real estate market. Many of the home buyers who are turning to 40-year mortgages are single income buyers who can’t afford to buy a home with a 25-year amortization.

So what is a single (or similarly positioned) first time home buyer to do? Should they eschew buying a home today out of fear that they’ll be paying their mortgage well after they’ve retired, as Roseman suggests. This is definitely one option.

But if the single home buyer shouldn’t buy today, when should they buy? Should they wait another 5-10 years for their salary to increase enough for them to afford a home with a 25-year amortization? This strategy is also risky, since renting and delaying your purchase for 5-10 years also pushes your mortgage payments further into your retirement years.

For the home buyer who doesn’t want to wait another ten years to be able to afford a home with a 25-year mortgage, here are a couple of tips to help you beat the risks and costs of the 40-year mortgage.

What's Going on With Toronto's Real Estate Market?

John in Toronto Real Estate News

There were a couple of reports yesterday that are sure to make the average home buyers head spin.

While the Toronto Real Estate Board announced a startling 22% drop in sales in March, RBC Chief Economist Craig Wright tells us that Ontario is on the brink of a recession which will be short lived thanks to Ontario's healthy real estate market.

So what's really going on?  Is the market 'cooling down', heading for a US style collapse, or is our real estate market healthy?

One important point to be aware of is that the decline referred to in media reports has to do with sales volume, not average prices.  Average prices continue to be on the rise.

Having said that, 22% is still a big decline and we should be taking a closer look at what's happening.  It's easy for a lot of people to look at last month's decline and conclude that we are on track for a crash in Toronto's real estate market.  But the numbers only tell part of the story.  To really understand whether our market is healthy or on shaky ground we have to look beyond the numbers to understand what caused the decline in Toronto. 

When it comes to the Toronto market, is supply and demand leveling out after years of imbalance? Was this decline caused by a speculative bubble bursting?  Are homeowners following their US counterparts in defaulting on their mortgage payments, leading to an oversupply of properties as banks turn to Power of Sale to recover their loans?  Perhaps our market is experiencing the high levels of speculation, high interest rates and high inflation that led to Toronto's real estate crash twenty years ago. There are countless factors that can trigger a decline in real estate sales and identifying the right ones in play today is key, because they don't all lead us to the same place.

Toronto Real Estate Sales Down 22% in March

John in Toronto Real Estate News

Here are the latest numbers from the Toronto Real Estate Board.

Low inventory levels kept the Greater Toronto Area resale housing market brisk but well off record levels last month, Toronto Real Estate Board President Maureen O’Neill announced today.

“Overall sales in the GTA declined 22 per cent compared to March 2007, 27 per cent in the City of Toronto and 18 per cent in the 905 suburbs,” said Ms. O’Neill. “It’s important to recognize though, that despite the worst winter in decades, 6,631 homes changed hands last month in the GTA and that is still a significant number.”

Diminished listing inventory, which at 20,533, was down six per cent from a year ago, kept prices strong in March.

Compared to last March, the average price in the GTA rose four per cent to $380,338 and two per cent in the City of Toronto to $404,361. As well, a few neighbourhoods experienced increased sales activity last month

Another Reason Why People Don’t Trust Real Estate Agents

John in Home Buying, Home Selling Tips

Multiple Representation (also referred to as Dual Agency) can occur when one agent represents both the buyer and the seller in a real estate transaction. Wondering how one person can effectively protect the rights of two people with such opposite interests? You’re not alone. It’s an obvious conflict of interest that the real estate industry has been able to keep legal.

Ethical issues aside, the other problem with multiple representation has to do with the “double-dip”, or as one real estate agent calls it the “2-1-0”: Getting paid Twice, for One transaction, and serving Zero parties. When the listing agent represents both the buyer and the seller in a transaction they typically “double-end” the deal receiving double the commission.

A home buyer I met recently told me about an experience she had with a Toronto real estate agent double-ending a deal.