February Maket - Should We Worry??

Price Growth Continues in February
TORONTO, March 5, 2013 –

Greater Toronto Area (GTA) REALTORS® reported 5,759 sales through the TorontoMLS system in February 2013 – a decline of 15 per cent in comparison to February 2012. It should be noted that 2012 was a leap year with one extra day in February. A 28 day year-over-year sales comparison resulted in a lesser decline of 10.5 per cent.

The average selling price for February 2013 was $510,580 – up two per cent in comparison to February 2012. “The share of sales and dollar volume accounted for by luxury detached homes in the City of Toronto was lower
this February compared to last. This contributed to a more modest pace of overall average price growth for the GTA as a whole,” said Toronto Real Estate Board (TREB) President Ann Hannah.

“Stricter mortgage lending guidelines that precluded government backed mortgages on homes sold for over one million dollars and the City of Toronto’s additional upfront land transfer tax arguably played a role in the slower pace of luxury detached home sales,” added Ms. Hannah.

The MLS® HPI Composite Benchmark price covering all major home types eliminates fluctuations in price growth due to changes in sales mix. The Composite Benchmark price was up by more than three per cent on a year-overyear basis in February.

“We will undoubtedly experience some volatility in price growth for some market segments in 2013. However, months of inventory in the low-rise market segment will remain low, resulting in average price growth above three
per cent for the TREB market area this year. Our current average price forecast is $515,000 for all home types combined in 2013,” said Jason Mercer, TREB’s Senior Manager of Market Analysis.

My Opinion:

Sales are lower once again year over year but so are listings. It is crucial to understand this correlation. If sales were low and listings very high I’d say that there is reason to worry (lots of supply with continued low sales will ultimately lead to reduced prices).

This is not the case! There are still a lot of buyers out there, but prices have reached a point where I believe they will hover at. This is why prices have increased year over year, but only marginally. Double digit yearly price increases are over!

POSITIVE START to 2013 - January Report

TORONTO, February 5, 2013 –

Greater Toronto Area REALTORS® reported 4,375 transactions through the TorontoMLS system in January 2013. This number represented a slight decline compared to 4,432 transactions reported in January 2012.

“The January sales figures represent a good start to 2013. While the number of transactions was down slightly compared to last year, the rate of decline was much less than what was experienced in the second half of 2012. This suggests that some buyers, who put their decision to purchase on hold last year due to stricter mortgage lending guidelines, are once again becoming active in the market,” said Toronto Real Estate Board (TREB) President Ann Hannah.

“It is interesting to note that sales were up for many home types in the GTA regions surrounding the City of Toronto. This is due, at least in part, to the additional upfront land transfer tax in the City of Toronto,” added Ms. Hannah.

The average selling price for January 2013 sales was $482,648 – up by 4.3 per cent compared to $462,655 in January 2012. The MLS® Home Price Index (HPI) Composite Benchmark price was up by 3.8 per cent over the
same period.

“There will be enough competition between buyers in the marketplace to prompt continued growth in home prices in 2013. Expect annual average price growth in the three to five per cent range this year,” said Jason Mercer, TREB’s Senior Manager of Market Analysis.


My Opinion:

This is what I wrote at the end of 2012 as my 2013 forecast:

“… I believe 2013 will bring a plateau in prices. It will be more difficult to qualify for a mortgage, and a result, there will be fewer buyers out there. This will reduce demand, but not to the point that prices will be negatively affected. I think prices will still increase, but not as fast or as much as they have in last couple of years (I would estimate a 2-3% increase)…”

The Market watch this month continues to indicate that my forecast may be accurate.

December Market Watch and 203 Housing Market Forecast!

Average Home Price Up Strongly in 2012

TORONTO, January 7, 2013 –

Greater Toronto Area REALTORS® reported 3,690 sales through the TorontoMLS system in December 2012 – down from 4,585 sales in December 2011. Total sales for 2012 amounted to 85,731 – down from 89,096 transactions in 2011.

“The number of transactions in 2012 was quite strong from a historic perspective. We saw strong year-over-year growth in sales in the first half of the year, but this growth was more than offset by sales declines in the second half. Stricter mortgage lending guidelines resulted in some households postponing their purchase of a home. In the City of Toronto, the dip in sales was compounded by the additional Land Transfer Tax, which buyers must pay upfront,” said Toronto Real Estate Board (TREB) President Ann Hannah.

The average selling price in December 2012 was up by 6.5 per cent year-over-year to $478,739. The average selling price for 2012 as a whole was up by almost seven per cent to $497,298. “Robust annual rates of price growth were reported through most months of 2012. Price growth was strongest for low-rise homes, including singles, semis and townhouses. Despite a dip in sales, market conditions remained tight for these home types with substantial competition between buyers,” said TREB’s Senior Manager of Market Analysis Jason Mercer.

Jonathan’s Opinion

2012 as a whole saw a 7% price increase. I believe 2013 will bring a plateau in prices. It will be more difficult to qualify for a mortgage, and a result, there will be fewer buyers out there. This will reduce demand, but not to the point that prices will be negatively affected. I think prices will still increase, but not as fast or as much as they have in last couple of years (I would estimate a 2-3% increase).

Properties will take longer to sell, and Sellers will have to re-evaluate what they think their properties are worth. This is the kind of market that we need…one that we have not seen for a long time.