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Real Estate update (RSS)
The real estate markets so far this year have been exceptionally active, with near all time record monthly sales volumes and fairly significant increases in average home sale prices. In June we saw a drop in sales to, a still reasonable, 8,442 home sales, with an average home sale price of $435,034.
The big news is that this year the "normal" pattern has changed. With May and June showing progressive decreases in volume when in most years they would be the most active sales months. As far as the Toronto real estate markets are concerned; it is like we are 2 months ahead of normal, peaking in April instead of June. So, why? Well a big part of this is probably related to the perceived expenses related to the now active HST. The idea of avoiding the HST, by closing before July 1st 2010, and paying 8% less for all related services has made home buyers extra eager to move this spring.
The people who have benefited the most from this strong spring has been the Sellers, since they are the ones that usually pay for the real estate agents commissions, which account for the biggest part of the increased expenses. Yes, a REALTOR®'s services are not cheap, although I would argue that they are very often worth what you pay.... but I am a little biased on that one.
So what does this mean for the real estate markets over the nest few months. Well, if you are a buyer it is a great time to get very active in your search. The main reason for that is that there is a fairly good sized supply of homes and a fair number of the general public are still thinking that the HST makes buying a house a lot more expensive, so they may postpone their searches for a while. That combined with the usual summer market conditions that often cause a slight dip in sales volumes in the summer may add up to some great deals with less buying competition. A great opportunity to find a motivated Seller for the cost of around $160 in taxes on your closing costs. That's it, only $160, since the Buyer's agent is most often paid for by the Sellers through the Seller's agent.
In the long term, being later this year and on, we will probably see that people become apathetic with the HST, taking it for granted, just like we all did with the GST shortly after it was introduced. At that time it will be business as usual. As for the potential for reductions in the costs of services; I think that is unlikely, based also on the experiences of the GST.
The GST was supposed to take the "hidden taxes" that were paid throughout the production and distribution process and give them transparency, for the consumer, buy summing them up at the end point of sale so that everyone knew how much tax they were really paying. By allowing the businesses to claim the tax credits, as they purchased materials and other business expenses, the end price of products and services were supposed to go down at least relative to the savings the companies would get. However, I doubt that many people can say that they saw any significant decrease in retail prices that could be contributed to the GST system instead of improvements in efficiencies, cheaper imported materials or foreign labour markets and the aspects of competition related them. This is also likely to be the case in the real estate markets.
Competition in the real estate markets already means that commissions have become much more flexible in the past seven, plus, years that I have been a full time real estate sales representative. It have changed the face of many of the real estate brokerages throughout the Greater Toronto Area giving rise to brokerages like Right At Home Realty Inc., who focus on providing their representatives with the services that are required without having to charge for extra "brick and mortar" office space that the REALTORS® are, very often, not using. This allows the individual REALTOR® to be more competitive and quicker to respond to clients needs that in many traditional brokerages, which is the main reason that I, and many more, moved ( for me it was from a Century 21 franchise to Right At Home almost 4 years ago).
But I digress... The real estate markets are likely to see a slight dip in sales over the next couple of months to be followed by a small surge, as buyer's realize that they still need to have a home to live in and that the costs are still just as affordable as they were in the spring. This would be similar, although smaller in effect, to the market reaction at the end of 2008 and the beginning of 2009 when the perception of the world coming to an end, through world recession and the U.S.A.'s election uncertainties. In the end life had to go on and people still needed to buy and sell homes and, statistically speaking, they were still affordable even as they do today.
So, If you are thinking of buying a home now is a great time to get actively searching with the help of someone like myself. If you are looking to sell you can still expect a fairly good price, but the higher your urgency to sell is the more likely you will have to be prepared to negotiate with offers that have lower initial offerings. At the end of the day both the Buyers and the Sellers have to agree to the value of the property in order to get a sale and everyone involved needs to be realistic in order for that to happen (with the exception that all parties have equally unrealistic expectations that lean in the same direction and nobody, like a REALTOR®, educates the parties [particularly their Client if a REALTOR® is involved] to the true value of the current real estate values). The Greater Toronto Area'a real estate markets are not about to stall completely and we are still likely to see healthy sales throughout the rest of the year so there is no need to panic in either direction, but it is always wise to get representation and know what are realistic expectations for your needs.
More in depth statistical reviews for Richmond Hill, Aurora and York Region's real estate markets will be posted soon.
Please feel free to call or email me if you are considering buying or selling a home, in York Region or the Toronto area, to get insightful representation and the results that we all want.
Everyday we are bombarded with information from a wide variety of sources. Some we have become accustom to ignoring, like advertising, and others we are told should be seen as authorities on facts about our world and how it effects us. News media is generally believed to be trustworthy and yet I keep hearing and reading fearmongering and out of context facts or at least without perspective.
I thoroughly agitated today while listening to the a news radio station today. They had a story on the
Toronto area real estate markets, or it could have been all of Ontario, and were questioning whether we were heading into "another bubble". They were talking about the increase sales of something around 70% "year over year for the month of December" and the huge increase in average sale price. The only thing I could think of is "Why are they not asking WHY" because if they did the numbers would not be nearly so surprising or indicative of a potential problem.
So what really happened? First of all "Year over Year", for December, just means the change for the month of December from 2008 to 2009 ( in this instance) and does not take into consideration any previous Decembers or whatever else has happened in any other month. Fortunately the Toronto area real estate markets are bigger than just one month per year and they affect and are affected by many different events and factors.
In this case the "news" station was not noting the simple fact that last December the real estate markets were very slow, due to a general perception of uncertainty and economic risk. There was an election in the States and the world economy was heading down rather quickly. This meant that fewer people were willing to commit to a large mortgage and fewer were willing to buy the very expensive homes. For freehold homes on the resale market only 125 out of 1692 homes sold, in December 2008, were sold for $700,000. That is only 7.39% were as in 2007 it was over 11%. This caused the Average price to drop dramatically, for which the news people were reporting a crash in prices, even though an individual home really only decreased in value by about 3%. This year the volume of sales is back up and at a historically hight level, with an increase of 19% over 2007 (for December on the Toronto Real Estate Board's MLS® system). However, that means that the increase in home sold, compared to December 2008, was 215% which would be alarming if it had not been for the drop in volume last year. Overall 2009 saw 87,308 homes sold in the Greater Toronto Area on the TREB MLS® system which was less then the number of sales in 2007.
As far as the average price, it increased by 14% over December 2008, but only 4.3% over December 2007. Horror of horrors that's just over a 2% per year increases when annualized. The reason for most of this increase in average sale price is the same reason why we had an inflated decrease in 2008, the composition of what is selling has changed again. Those $700,000 plus homes that were harder to sell in 2008 are selling again and account for 11.8% of the freehold resale real estate transactions.
There was also a statement that the markets are expected to cool down later this year and have smaller year over year increases. Well that's a no brainer. Seeing as the sales volumes were in a slump last year for the first 3 months it makes sense that as this market carries on stably the difference will decrease as we approach the months were last years sales were more normal and not affected by the uncertainty that people were feeling at the end of 2008 and early 2009.
They were commenting on how the HST is likely to cool down the real estate markets. This is very true about the new home markets as most new homes will cost an extra 8% due to the added tax. Especially for freehold homes that are less likely to be under the $400,000 price range where there are rebates available. On the resale side the HST only affects the the fees related to buying or selling and not the price of the home itself. For resale homes there may be an increase in value and demand as an 8% gap in prices between new and resale is instantly created on July 1st.
The facts are that the economy is doing fairly well, all things considering, our lending markets are fairly secure and interest rates are still very low and are likely to stay "historically low" for a while even if they do rise as the year goes on. Most importantly, there are a lot of people that want to buy homes, either upgrading, downsizing or buying their first home. We have not been in a "bubble" in this millennium, as the economics behind the real estate market (in the GTA) are still very sound with high demand and reasonable affordability. I really hope that there will be a resurgence in the "investigative" side of journalism very soon, people who ask "Why" before parroting statistics that they don't understand, solely to meet a deadline or cause panic.
The important thing to note is "Don't Panic" last years dip was entirely related to people putting their plans on hold because they were nervous. Now the prices are higher and likely to continue in that direction, preferably in a sustainable manner, and the best way to keep homes in your realm of affordability, if it is currently borderline, is to be in the market by owning. Not irresponsibly so, but that is were having the right agent comes into play, one that listens to your needs and helps you find the balance of what you need and want to keep your investment as safe as possible.
The Greater Toronto Area real estate markets are finishing off the year with a boom. September 2009 had 8,196 homes ( both freehold and condominium) through the Toronto Real Estate Board's (TREB's) MLS® system with an average sale price of $406,877.
In the Richmond Hill MLS® districts there were 225 detached homes sold out of 403 available homes with an average sale price, for the three districts, of $627,700. This is a huge jump up from last years 126 homes sold in the Richmond Hill districts and a mere 6,424 homes sold in the GTA in 2008.
Now is a great time to buy or sell a home in Richmond Hill, Aurora or anywhere in the Greater Toronto Area.
First A quick update on this years Toronto and GTA real estate markets. Most of us recognized that 2009 started off as a very slow year. Buyer's were nervous and their savings had been decimated or worse. But the real estate market started to bounce back in March. The Total number of home sales on the Toronto Real Estate Board's MLS® system in March, April and May 2009 were only slightly lower than the 2008 numbers, before the markets started to slow down.
Real estate was far hotter, this summer, than the weather. June 2009 set an all time record for most homes sold, in the month of June, with 10,955 home sold. July was only just short of 10,000 home and August put in a very respectable 8,035 home sales. This compared with 2007 is only 24 less than the number of homes sold, in the Greater Toronto Area, for August and the average sale price was up over $26,000 from August 2007 to August 2009 at $387,921.
This year there have been more sales in the first 8 months that in the same month for 2008 despite the sluggish start. September is shaping up to be another good month for home sales with over 3,300 sales in the first half with an average sale price of $393,818.
This is proof that the Toronto area real estate markets have weathered the global downturn and that there never was a bubble in our prices. What we experienced last fall and winter was due to people being nervous about the economy, mainly the American economy, and the possible outcomes of the US election. Now that confidence is rising we are well placed to home values rise again at a reasonable level.
The Province of Ontario has just announced that it is extending the land transfer tax refund for first time buyers of newly constructed homes to now include resale homes. This means that first time home buyers can now save up to $2,000 on a resale home purchase. The legislation for this rebate has not yet been passed, but any first time home buyer that enters into an "agreement to purchase and sale" on or after December 13th, 2007 is entitled to a rebate of up to $2,000 once the legislation is passed.
The City of Toronto has also up dated their new land transfer tax so that first time home buyers should not have to pay the land transfer tax on the first $400,000 of their home purchase at all. Previously any first time home buyer who is buying a home that is priced over $400,000 had to pay the full tax up front and then get a rebate for the tax paid on the first $400,000. Under their new system, which they hope to have in place before Feb 1st 2008 when the tax starts, first time home buyers will be able to pay only the tax owing on the balance of the purchase price minus $400,000.
A quick update for anyone who missed the announcement. The Government of Canada has passed Bill C37 which changes the minimum loan to value amounts for conventional mortgages.
What does this mean to you? In the past if you were borrowing more than 75% of the purchase price, or value of the property, you had to get CMHC or Genworth mortgage insurance. Now that Loan to Value amount has changed so that there is no need for high ratio mortgage insurance if you are borrowing less than 80% of the homes value. This move will save you a large chunk of change (over a thousand dollars) if you can come up with a 20% downpayment. For those that had been saving up to have a 25% downpayment and avoid the insurance premium, you can now put 20% down on a larger or better home, or spend the extra 5% on furniture, upgrades or savings.
Busy! That pretty much sums up the current greater Toronto Real Estate markets and why I have not posted in too long. February and March had very strong sale, just lower that Feb. and Mar. 2006, but April 2007 blew past April 2006's 8361 sales. With 9452 sales in April 2007 this sets a new record for April sales in the GTA real estate markets.
Even Oak Ridges, which I have mentioned was at risk of having an over supply of homes, sold about 30% of the listed homes in April 2007. The MLS® districts for Richmond Hill and Aurora sold between 30% and 40% of the available homes in April 2007. Newmarket sold 45% of its housing supply and Markham's N11 district sold almost 50% of the available homes with 298 out of 611 homes being sold in April 2007.
Average sales prices were also up in April 2007. Continuing low mortgage rates and the strong economy are still setting the stage for exceptional volumes of sales in the resale housing markets. Even with a slight increase in recent 5 year rates, we are seeing that homes that are priced correctly, and have had a reasonable amount of "staging", are selling fast.
The mid May sales volume is also on route for a new record high for May. With just over 5000 sales in the first 15 days of May 2007, home buyers are telling us that there is still a very strong resale demand.
If you are looking to move in the near future and do not want to waste time and energy, and want to find your perfect home as quickly as possible, call me at 416-278-2335 (direct line) and set up an appointment with myself or one of my associates. I look forward to providing you with fast, professional service focused on your needs.
