Price Up, Sales Down This Fall – November 2012 Market Assessment

Price Up, Sales Down This Fall

So what does this mean? To pull out the crystal ball once again…condo sales are slower, we will likely be looking at a 10%+ decline in value once the numbers are in for the entire fall. On top of this the luxury market has been slow all year, the exception is the 1.5 million dollar multi-residential homes in places like the Annex, which are very strong. The reason for this is that many purchasers are taking advantage of the low interest rates and some have decided to use the home as a principal residence to further lower living expensive and afford a very established neighbourhood. So, what this leaves us with is the 600k-1 million range, which is still moving well. Less buyers on the lookout but good product may have a couple of offers on an offer night…the difference being the sky rocketing sale over asking isn’t prevalent. Note: this is appears to be a Media driven slow down… except for to some extent the condo market, which has seen investors getting out.

October Overview
6,896 transactions through the TorontoMLS system in October 2012 – a decrease of 7.1 per cent compared to October 2011. There were two more business days in October 2012 versus October 2011. On a per business day basis, transactions were down by 15.6 per cent.*
“Sales have decreased in the second half of this year compared to 2011, especially since the onset of stricter mortgage lending guidelines at the beginning of July. The prospect of higher monthly mortgage payments due to the reduced maximum amortization period has prompted some households to delay their home purchase,” said Toronto Real Estate Board (TREB) President Ann Hannah.
The average selling price for October transactions was $503,479 – up 6.2 per cent compared to October 2011. The MLS® Home Price Index composite benchmark price, which allows for an apples-to-apples comparison in terms of home attributes, was up by 5.1 per cent.
“We continue to see price increases well above the rate of inflation. Active listings have remained low from a historic perspective, so substantial competition between buyers still exists, especially for low-rise homes,” said Jason Mercer, TREB’s Senior Manager of Market Analysis. “It should be noted, however, that the annual rate of price increase has been edging lower over the past few months as the market has gradually become better supplied,” continued Mercer.

*NOTE: The majority of transactions are entered into the TorontoMLS system on business days. There was a mismatch of two business days in September and October of 2012 compared to the same months last year. This is why sales on a per business day basis were noted in releases dealing with these months. The business day anomaly between the two months has now balanced out.

In addition, CMHC has reported: Canada’s new home market is expected to continue to moderate in the last quarter of 2012 and into 2013. Meanwhile, activity in the existing home market is expected to hold steady, leading to house price growth in line with or slightly below inflation.
Source: TREB