Don’t worry, be hot and happy.
If you’ve been keeping an eye on real estate news, you’ll be seeing a lot of bubble talk.
June was hit with a multiple whammy that has led to softening of the market, most of which was fairly expected.
First, we had a very early spring market with unusually weather and pent up buyers. That typical seasonal surge correspondingly ended early, triggered by the G20 and perhaps a touch of FIFA World Cup.
Second, when everyone saw the return of multiple offers and frenzied buyers, a lot of homeowners decided to jump in and sell….there was a huge 21% increase in inventory in June which flipped the table a bit, increasing choice and decreasing the pressure for buyers, putting some of the power back in their hands. But a lot of sellers came to the party late and were caught off guard by the early cooling of the spring market.
Rate increases and the HST have had some effect, although not quite as dramatic. HST really hit the pockets of new home buyers but resale hasn’t seen the impact. If it was going to be a huge motivator, numbers would have been much stronger in June since offers had to be written by the deadline to be exempt.
Another factor were the new CMHC mortgage regulations, which increased the down payments for investors and the income requirements for buyers who must qualify for a five-year fixed rate.
And as per the media frenzy, the sky is not falling. The market typically slows down in the summer anyway and you can’t get too caught up in month-to-month changes.
We foresaw a slow down for the latter half of 2010 and expect this to continue. The good news is that the market is becoming more balanced for both buyers and sellers. Buyers are not necessarily in competition but sellers are still getting good value for their homes. Sellers do need to bring their expectations in line with the current market but should still have confidence.
I still see a seasonal boost in the fall once everyone has their head out of summer. The true test of the market sustainability will come once we see the numbers for Q4 of this year.
Until then, enjoy the long hot summer!
For the Toronto Real Estate Market Watch and the Housing Market Charts, see below…
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.”
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