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.
April 16, 2008Market |