Market Watch Report

Market More Balanced in June


July 6, 2010 -- Greater Toronto REALTORS® reported 8,442 sales through the Multiple Listing Service® (MLS®) in June. This represented a 23 per cent decrease compared to the record 10,955 sales reported in June 2009. Sales for the second quarter of 2010 amounted to 28,810 – up one per cent annually. Year-to-date sales through June were up 23 per cent to 50,455 compared to the first six months of 2009.

"We experienced a record number of existing home sales during the first half of 2010, but these sales were weighted more towards the beginning of the year," said Toronto Real Estate Board President Bill Johnston. "The pace of home sales has moderated from record levels over the past two months with the prospect of higher mortgage rates."

The average price for June transactions was $435,034 – up eight per cent compared to the average of $403,972 recorded for June 2009.

"With more homes to choose from in the second quarter, many home buyers have been making less-aggressive offers. This has resulted in less upward pressure on the average selling price," said Jason Mercer, TREB's Senior Manager of Market Analysis. "The annual rate of average price growth in the second half of 2010 will be in the single digits."


Jonathan's Opinion

Jonathan’s Opinion


As expected, the real estate market has begun to cool off at a healthy pace. The reason sales have decreased in June is simply because of the law of supply and demand.

When interest rates were at a historical low the amount of buyers was much higher than the amount of sellers, thus leading to quick sales and higher prices.

As interest rates increase we notice that the amount of buyers and sellers are beginning to reach equilibrium. What will happen is that buyers will begin having more selection, and no longer have to overpay, or compete for a house.

This will lead to sellers not selling their homes as quickly anymore, and may also, in the future, lead to a slight correction in prices.

I say in the future because in order for a price correction to occur, interest rates must be much higher than they currently are, and although they are going up, they are still low enough to be attractive to buyers.

It is not necessarily a “Buyer’s Market” just yet, but it will get there.

Remember, this is a good thing, as it restores normality and balance in the real estate market, which is what is needed!