Toronto Real Estate Market “Leveling”

After years of record-setting prices, the GTA’s real estate market increasingly appears to be leveling off, analysts and statistics suggest, although experts remain relatively optimistic about the health of the region’s market. Since April, the number of properties to exchange hands has dropped each month, compared to the records set in the same months last year. In June, for example, there were 18% fewer sales than in 2007. Numbers released this week for the first half of July show the trend continues, with a drop of 11% over the same period in 2007.

Meanwhile, the price of an average house in the GTA continues to rise, albeit at a slower rate than last year.

“This is very common in the real estate cycle, that prices are going up but not so much, and volume goes down,” said William Strange, a professor of real estate and urban economics at the University of Toronto’s Rotman School of Management. He called the GTA a “leveling” market. The Canadian Real Estate Association announced this week the first drop in housing prices nationally in almost a decade, but characterized it as a one month blip that is not likely a sign of things to come.

That news was followed by the Toronto Real Estate Board’s (TREB) latest figures, which showed that the average price of a home in the GTA during the first half of July was $379,072, which is a 1% increase from the $374,254 recorded in the first two weeks of July 2007 and a 9% increase from $346,267 recorded during the same period in July 2006. The board has emphasized comparisons to 2006 in order to “present a more accurate perspective” of this year’s resale housing market, since 2007 was an overheated year.

Up until July, monthly sales in the region had increased by about 4% from 2007 to 2008.

Jason Mercer, a senior analyst of the GTA market for the Canada Mortgage and Housing Corporation, said that slowdown may be attributable to a rise in homes up for sale, which has tempered the bidding wars. Also, “as you move into July you move out of the strong spring sales months and into the summertime when people are away,” he said. “Before I made a call on price or moving forward I’d wait until we were back in the fall when you see a bit more of activity pick up again.” TREB reports that in the 416 area, the average price was $419,199, up 1% from the $414,321 recorded during first half of July, 2007, while the average price in the 905 was up 2% from $345,741 recorded in the first half of July, 2007.

“Today, we’re kind of on the cusp of a sellers and a balanced market,” said Mr. Mercer, who expects to see some price growth through the year. There was an 11% drop in properties sold across the GTA, however some neighbourhoods recorded impressive gains. The Annex, for example, sold 70% more properties in the first half of July than the same time last year, due largely to purchases of detached homes. Bowmanville saw a 12% increase in sales, while Brampton went up by 18%. “I don’t think anybody looking at Canadian markets right now is seeing an absolutely imminent crisis from stuff that is happening here,” said Mr. Strange, the U of T professor.

And while Torontonians have profited from the housing boom of recent years, it was a far cry from the frenzy that swept through Alberta, where prices have dropped.