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

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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

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Related Posts:

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

Beware if You're Purchasing a New Home or Condo to Flip

Bob Aaron in Legal, Home Selling Tips, Toronto Real Estate News

Ed. Note.  We are pleased to welcome Bob Aaron, a Toronto real estate law expert, to Move Smartly.  A leading practitioner in the legal profession, Bob is an elected director of the Law Society of Upper Canada.  Each week, Bob shares his popular Toronto Star column articles with the readers of Move Smartly.

A recently discovered policy of the Tarion Warranty Corp. could have an enormous impact on the thousands of buyers of new homes and condominiums who resell the properties without moving in.

The policy was brought to my attention by Vidas Augaitis, a colleague who practises real estate law in Collingwood.

In April 2005, two of his clients, whom I will call Deb and Chris, bought a new house in Wasaga Beach from Pinevalley Developments Corp. On closing, the buyers received a Certificate of Completion and Inspection and a warranty certificate from Tarion confirming that the house was enrolled under the warranty program.

When they closed the transaction with the builder, Deb and Chris intended to sell their existing home and move into the new one. For various reasons, they changed their minds and eventually decided to sell the new house. The resale closed on July 24, 2007.

In January of this year, Deb and Chris received a visit from a senior investigator with Tarion's enforcement department. He told them that they should have registered the house with Tarion when they resold the property, since he believed it had not been occupied during the period of their ownership. The Tarion representative pointed out that anyone who sells a new home in Ontario without registering it with Tarion is liable to a fine of up to $25,000 or a term of imprisonment of up to one year, or both.

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

Why is Toronto's Real Estate Market Cooling Down?

John in Toronto Real Estate News

The Toronto Real Estate Board released their statistics for the first half of March and it's no surprise to hear that sales in the GTA are down again, this time 14% over the same time last year.  However, prices continue to rise.

While TREB continues to blame the snow for this slow down, I think that story has run its course. The slowdown in sales is not just about the snow.

Back in September I wrote a post called Extended Amortizations and Toronto's Real Estate Market: Real Opportunity or Bubble Booster where I discussed the impact the 40-year mortgage was having on our market. When CMHC moved the maximum amortization period from 25 to 40 years, a lot of people who had been priced out of the market could suddenly afford to buy.

This influx of home buyers helped push the number of home sales in the GTA up to over 93,000 in 2007, roughly 10,000 more than the number of homes sold in 2004, 2005 and 2006.