TORONTO, November 3, 2012 –
Greater Toronto Area REALTORS® reported 6,896 transactions through the TorontoMLS system in October 2012 – a decrease of 7.1 per cent compared to October 2011. There were two more business days in October 2012 versus October 2011. On a per business day basis, transactions were down by 15.6 per cent.
“Sales have decreased in the second half of this year compared to 2011, especially since the onset of stricter mortgage lending guidelines at the beginning of July. The prospect of higher monthly mortgage payments due to the reduced maximum amortization period has prompted some households to delay their home purchase,” said Toronto Real Estate Board (TREB) President Ann Hannah.
The average selling price for October transactions was $503,479 – up 6.2 per cent compared to October 2011. The MLS® Home Price Index composite benchmark price, which allows for an apples-to-apples comparison in terms of home attributes, was up by 5.1 per cent.
“We continue to see price increases well above the rate of inflation. Active listings have remained low from a historic perspective, so substantial competition between buyers still exists, especially for low-rise homes,” said Jason Mercer, TREB’s Senior Manager of Market Analysis.
“It should be noted, however, that the annual rate of price increase has been edging lower over the past few months as the market has gradually become better supplied,” continued Mercer.
These numbers continue to indicate what I mentioned on my September report…that the market is cooling off. The market is not “crashing” or “correcting”, it is “normalizing” (which is healthy for the economy)…there are still too many buyers (demand) out there for a crash to occur. What is happening is that homes are not selling overnight and for ridiculous amounts over list price anymore (although some still are). Financial institutions are becoming stricter in giving out mortgages, and qualifying is becoming more difficult. These numbers will be consistent throughout the winter. One thing to look out for is the continuation of these numbers even next spring…if that happens, then we may have a problem. I believe that we will have another robust spring come 2013.
