August 2013 Market Review & Getting Geared up for the Fall Market!
Yesterday (Sept.5th) TREB released the monthly sales stats for August. Following a busier-than-usual July, August sales were up 21% to 7,569 residential transactions (compared to 6,249 sales in August 2012). The average price also continues to rise, up 5.5% year-over-year. Of note, the Composite Home Index, which weights by type of house (because a big detached house will sell for a higher average price than a small row house), was up a somewhat more manageable 3.7%. Both numbers are well within my comfort zone, vis-a-vis long-term affordability.
Once again, condo sales caught my eye – they were up 21.6% over August 2012. The average sale price of a condo in the 416 was up 2.3% over last year, to $357,572. Over a shorter time-frame, that’s up from $342,847 at the end of 2012, a 4.3% increase that would take into account the December doldrums. It may be too soon to say for sure, but I think it’s looking more and more like The Big Condo Scare of 2012-2013 is over.
As I noted in my July report, the market picks up significantly in the fall – more listings and more sales. It’s just the way the Toronto real estate market works – busy spring and fall, quieter summer and winter. This September is already heating up. If you are in the market, you have probably noticed it: there are more listings worth seeing this week than there were last week, and/or more prospective buyers touring through your house. It will continue like this until the end of October, perhaps extending into November (which is a bit of a wildcard – there could be anywhere in a range of 6000 to 8000 sales that month, which is a pretty big range).
A partial driver of this fall’s market will be the pending expiry of the 2.99% mortgage pre-approvals, which will mostly be done by the end of October: buyers will look to secure a purchase soon, before they lose that rate. The big lenders (i.e. the banks) have pushed up their mortgage rates over the last month or so, and are in the 3.5% range for a best-case, five-year fixed rate mortgage. If you have great credit, you can probably get something close to 2.5% on a variable rate mortgage, but it’s getting harder.
The relatively busy summer that we just had is a reflection of the ongoing, strong demand for real estate in Toronto. With more listings hitting the market over the coming weeks and months, we should all get ready for a busy, and possibly long, fall market. If you want to buy or sell this year, call me and let’s get to work.