The Numbers – TREB reported 5,879 transactions through September 2012, with an average selling price of $503,662 – an increase of more than 8.5 per cent over 2011. Despite an uptick in supply, the number of transactions was down by 21% compared to September, 2011. (TREB pointed out the following in their report: “[T]here were two fewer working days in September 2012 compared to September 2011. The majority of transactions are entered on working days. On a per working day basis, sales were down by 12.5 per cent year-over-year.”)
My Thoughts – September was a bit of a frustrating month. Despite on-going negative media (and political) noise about the Toronto real estate market, the ‘on-the-ground’ reality in Toronto is that it’s still hard to find quality houses for my clients to buy. Even with tighter mortgage rules (which are actually good for the market long-term) and bad press, we have more buyers than we have sellers (i.e. more demand than supply) and the result is higher prices.
Supply is an interesting topic (to me, anyway). I have been saying for a while that we are still well below pre-recession levels. Take a look at this:
Active Listings by Month/Year (TREB stats)
September 2004 – 23,353
September 2005 – 22,875
September 2006 – 24,367
September 2007 – 20,626
September 2008 – 27,277
September 2009 – 14,771
September 2010 – 18,305
September 2011 – 18,793
September 2012 – 21,621
In the period 2004-2006, before any hint of an upcoming recession, we saw robust supply in a range of 22,000-24,000 active listings in the month of September, the typical start of the ‘fall market’. Supply spiked in 2008, as buying activity dried up, then plummeted in 2009, as homeowners took their listings off the market (or simply waited out the recession – which is why we didn’t experience a collapse in prices). Since then, the supply has increased, but still hasn’t recovered fully. I believe that explains much of the price increase we have seen in the Toronto market since ’09: demand exceeds supply.
Despite the general challenge of low-ish supply, I have noticed some caution in the marketplace. Perhaps it’s due to all that negative talk. Either way, not every house is selling on offer day, and some of those that do get only one offer – although there are often other willing buyers waiting in the wings. (That said, many buyers are still making strong moves on attractive properties. One house in the Beach sold for about $105k over asking. That may reflect a bit of an “oops” price, but it still indicates strong demand.)
If you want to buy in today’s market, my advice boils down to this: be ready! Start with my recommended prep. Then, when you find a house that you like, pounce on it. You have your mortgage pre-approval, you know your budget, you’ve seen an inspection report, so make an offer on offer day! If you wait, you may find yourself battling other buyers who also sat out offer day – ’cause you’re not the only one being a bit extra cautious these days. If you step up on offer day you may get a clear shot at the house, meaning you can make your offer conditional on financing, which will make your lender happy.
Be ready – and call me if you need professional real estate help! 😉