Ups and Downs

Hello! It's been a while since my last post. Not too much has changed since my June posting. The latest report on the Toronto real estate market is very positive considering the European and US economic crisis. Luckily Canada, in general, has separated itself from these countries/unions with its own set of criteria for economic growth, spending and restrictions. Yes, there's been some downturn in the economy, but the real estate market continues to thrive. Low interest rates keep home buying affordable. The downside is that there hasn't been as many homes on the market in 2011 as in past years, creating some inflated pricing (homes which tend to sit without being sold) or the opposite, bidding wars on well-priced, structurally sound and well designed homes. This latest report from the President of the Toronto Real Estate Board reflects the current market conditions.
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'The Bank of Canada is expected to be on the sidelines until the second half of 2012 or even into 2013. However, home ownership affordability in the City of Toronto could be further improved with the removal of the City’s land transfer tax. This tax currently represents a substantial upfront cost for home buyers. 

With market conditions remaining tight in the GTA, the average selling price continued to grow strongly in August – up by more than 10 per cent year-over-year to $451,663.
We remain on pace for the second best year on record for sales. Approximately 90,000 transactions are expected by the end of December," said TREB's Senior Manager of Market Analysis Jason Mercer.
Major home ownership costs, including the average monthly mortgage payment, remain affordable despite the strong price growth experienced so far this year.'

This report is positive and hopeful for the remainder of 2011. The downside is, with Toronto's recent woes re: service cuts and deficits, it's unlikely we will see the Land Transfer Tax abolished.

Strongest May Ever!

The Toronto Real Estate Market reported only a 2% decrease in sales over last year at this time. Many would be suprised to read this statistic as 2010 was touted a ‘boom’ Spring Market. Selling prices have grown at a faster rate over the last few months of 2011 compared to 2010. This isn’t surprising given that the number of available homes for sale versus interested buyers is again, creating a seller’s marketplace.

Another reason for the strong sales reported this month is a reflection of a positive outlook on the economy of the GTA and the stable low interest rates. Many were doubtful what with a Federal election scheduled in the middle of the real estate market’s strongest season, but the outcome has only spurred activity. With growing earnings and the numbers of jobs increasing it makes sense that households remain confident in their ability to purchase and pay for a home over the long term.

The Bank of Canada is widely expected to leave its key benchmark interest rate unchanged next Tuesday — and may even sit on the sidelines until September, economists say. That’s good news for consumers who will continue to enjoy record low interest rates on mortgages and other borrowing. Even if the central bank leaves it’s overnight rate unchanged at 1 per cent next week, it’s likely that interest rates will be going up. Just when that is, is unknown. Late last year, and even at the beginning of 2011, economists were certain that the Bank of Canada would start increasing its overnight rate this spring. That was pushed to the summer amid continuing worries about the health of the U.S. economy. Now more economists are expecting that the central bank will take a pass at its July policy meeting as well, and begin raising rates in the fall.

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Strength in Numbers

Who knew? Even after the introduction of the new mortgage rules last Friday (see last blog for full details) homes are still attacting situations the likes of these 2 guys to the left. Many homes, priced well, not really below market value, as has been the strategy in the past, are garnering more than one, two or even 3+ interested parties! That to say, the Toronto real estate market is not following the predicted trend of slowing down. This was the general assumption that was anticipated after stricter rules were implemented last week. It's early days, but clearly the proof is in the pudding. In the last ten days alone, over 40 homes were sold in the Leslieville/Beach/East York area, half over the asking price, many of those $30K+ over the listed price. There is strength in numbers! Much of this we can put this down to a couple of factors; location, condition and price of the home. So, if you're interested in selling and want the best result, make sure your home is in tip top shape, sound and priced well. You're sure to get the attention of more than one interested buyer. And buyers, don't despair! Yes, bidding wars occur, but this is why this market is termed a 'goldilocks' market. It's not TOO hot and not TOO cold - it's just right. Meaning that while homes can sell quickly and over asking price, there are also many nice homes, well priced that are selling for asking or just under. No pressure there. So enjoy the coming months in either your search or sale of a new home. Everyone is bound to be happy with their result.

The Heat is On

Well, officially Spring is almost here, although you wouldn't know it outside. It's a brisk -18C as I write this.

With winter so far being a steady diet of warm, cold, warmer, colder, our Toronto Real Estate Market is riding the same path it seems.

Typcially, early January is a very quiet time indeed for real estate activity, but it was soon followed by a bit of a surge in sales late into the month. Early February was again a little quieter, and it appears now, as I write (March 2nd) the Spring Market has definitely Sprung. While this is a little atypical so early in March, the Federal Finance Minister, Jim Flaherty's mortgage changes for 2011 have seen a surge in listings and hungry buyers out to purchase a home before the new rules come into affect March 18, 2011. Which are:

1. The maximum amortization period for a government-insured mortgage was lowered from 35 to 30 years.

2. The upper limit that Canadians can borrow against their home equity was lowered from 90 per cent to 85 per cent.
3. Government insurance backing on home equity lines of credit, or HELOCs, has been removed.
While these rules make sense and force Canadians to tighten their belts a bit, it does mean higher mortgage payments over a shorter amortization period (approx $96/mth more) and that's enough to get buyers out in the cold to shop.

However, the confidence in our economy seems to be bourgeoning and it's unlikely the market will come to a standstill after March 18th.
It looks like a healthy, steady market is here to stay; for a while at least. There is no plan to increase the low interest rates we've been enjoying, just yet
so if you're a seller or a buyer, this could be a fruitful time for you. Enjoy the experience and (the soon to come we hope) warmer weather!

Spring has Sprung! Brrrrr

While most of us consider the Spring real estate market to coincide with bulbs blooming and crocuses popping their heads out, it should really be renamed the Winter Market. Once Christmas credit card bills and the indulgence of holiday time comes to an end, so does the resting brain. Every year buyers get a second wind around mid January and like to start their search for a new home. It's a great time for sellers to put their homes up for sale as traditionally there isn't much 'product' (ie; homes) on the market. With a burgeoning group of buyers this can lead to disappointment and not much variety. Having said that, each year more and more sellers are seeing this trend and 2011 is one of the better winter markets that continues to grow. By 'Spring' there will be more competition (ie; more homes for sale) and buyers will have more options. So, here's a tip. Don't worry that your garden isn't in full bloom for prospective buyers in February/early March. Pull out some pictures from last year's garden party and put them together in a binder for potential buyers to see just how lovely the garden WILL look when the thaw arrives. Because once the weather warms up, homes will be popping up like tulips and you may have more competition for a buyer.

For buyers, your time is 2011. As predicted late in 2010, come Spring, the market trend is predicted to be more stable and without the huge discrepancy in terms of supply/demand seen in the last 6-7 years. So, it looks like a win/win for sellers and buyers in 2011. The government has curbed its lending strategies, but for those who were able to afford a home prior to this new legislation, they will probably still be able to now. After all, you don't want to be buying a home when you only have the bare minimum eligibility anyway. It's risky and when buying a home, you want to feel safe and 'sound'.

Jingle Bells, Houses Sell

Happy Holidays! It's been too long since I blogged last - October I see. Well, things have changed quite a bit since then. The shock of the HST has warn off, then the landslide win of underdog (?) Rob Ford took our breath away for awhile, and now....we are in the midst of holiday time. This has not stopped homes from being sold or bought in this traditionally slow season. However, this year has seen some changes of heart. While the summer/fall season was slow, confidence in the market re-established itself late in October and continues to stay steady. This is great news of course, despite the resurgence of grumblings by the Bank of Canada and its publication of Canadian household debtloads. Yes, we all carry debt - too much perhaps - but the low interest rates keep us confident that we can afford what we take on. The warning bells are real and we need to heed them as rates, the likes of which we may not see again, are going to climb - eventually. However, home prices are staying on the higher end price-wise, which can cancel out the term 'buyer's market' even as the interest rates are low. So be careful, and don't consume too much this holiday season! Instead, save for that new home in 2011. It'll be worth every saved penny to put towards a new home. In the meantime, enjoy time together with friends, family and share the gift of togetherness. It's free!