The Toronto Real Estate Board reported a record number of housing transactions in February (7,291 homes sold through the Greater Toronto MLS), along with an uptick in the sales-to-listing ratio. This common indicator of the 'tightness' of the real estate market had taken a dip in January, but has now returned to the heightened levels witnessed through the second half of 2009.
The market activity is widespread. Although first-time buyers in Toronto's core neighbourhoods helped launch the recovery from the lows of early 2009, the market is now further being buoyed by move-up buyers, purchasers of luxury homes, and those shopping for a 905 address. Buyers are motivated by the low interest rates and the positive perception of housing being a good long-term investment. A very small proportion of buyers are also seeking to purchase prior to the implementation of the new mortgage lending requirements that take effect in April.
Home sellers have not been quite as motivated thus far, with resale housing inventory levels remaining low, and multiple offers being generated on almost all listings I see, including those that are not listed with a pre-specified offer date. This past week I sold 4 homes in the $350,000 - $900,000 price range, and encountered the following:
- Leslieville and Danforth Village fixer-uppers with three and five offers respectively
- Little Italy Victorian charmer with five offers
- High Park detached family home needing renos selling with ten competing offers.
Success in each of these transactions only came as a result of careful property selection, extensive research, and a firm understanding of value in these neighbourhoods. Achieving such positive results for buyer clients in a market such as this is challenging and certainly not without stress.
Although buyers should remain active and motivated by the continued low mortgage rates, home sellers may start catching up in advance of the implementation of the HST this summer, which will add to the transaction costs of selling a home in Ontario. In the February issue of the Toronto Real Estate Board’s Market Watch newsletter, TREB's Senior Manager of Market Analysis Jason Mercer states:
"Annual growth in new listings is expected to continue. New listings growth will start to outstrip sales growth as we move through 2010. As the market becomes better supplied, we will see more sustainable single digit rates of price growth."
The RE/MAX Market Trends 2010 report takes a more bullish stance in its forecast for the Toronto real estate market, with a prediction of "a heated Spring market in the Greater Toronto Area, characterized by unprecedented demand and limited supply." In the accompanying press release, RE/MAX Ontario-Atlantic Canada Executive Vice President Michael Polzler states:
"There have never been so many motivating factors in play at once. We're in for a heated Spring market that will, in all probability, spill over into the summer months, as the window of opportunity draws to a close. The supply of homes listed for sale has been drastically reduced, housing values are once again on the upswing, and banks and governments are moving in unison toward stricter lending policies.”
So, will Toronto's real estate market find balance this spring? It's a rhetorical question, given that a complex and open market such as resale housing is always in a state of flux. I believe that in the next month we should start to see an increase in the number of homes being offered for sale coinciding with a continued increase in the number of transactions, resulting in more moderate increases in selling prices. Stay tuned…
For further info and reports, see the following:
- Toronto Real Estate Board Market Watch reports archive
- RE/MAX Market Trends 2010 complete report
- RE/MAX Market Trends 2010 accompanying press release