Real Estate Market Update
Gary Zalepa Jr. (Broker), V.P. and Division Manager
Royal LePage Real Estate Services Ltd, JOHNSTON & DANIEL DIVISION, Brokerage
Major media outlets are referring to August 2012 sales figures from several sources. TREB reported a decline in sales of 12% with a 22% decline in condominiums. Media are pointing to a dramatic decline in activity from August 2011.
Some media have asserted that prolonged, low interest rates have fueled recent sales gains and have artificially propped up the real estate market. They credit the recent mortgage rule changes with the coincidental decline in sales.
Last week Macleans Magazine reported that “Canadian Housing, there is an obvious over supply problem in Vancouver, Toronto and Montreal.” This story referenced monthly downtown Toronto condo sales of approximately 350 units for August 2012. Declaring it a four year low.
TREB reports over 660 units sold for August 2012. Lower than 2011 but on par with 2010, not a four year low. Macleans is conveniently picking a specific district in the core to justify their point.
Closer examination of the complete market data for central Toronto reveals a different story. The aggregate statistics that the media are referring to are simply averages of many diverse market segments. Each differentiated by product segments, price categories and geography. Generalizations of this nature result in inaccurate or misleading summations.
Following the GTA statistics at the top level is similar to quoting the TSX numbers. That doesn't reveal the whole picture.
Fundamentals that exist in the market include the following. Modest price appreciation of 6.5%, balanced listing inventory, with healthy absorption rates.
Supply is not out pacing demand. TREB reported that in August 2012 the new listings were 5% less than new listings in August 2011. The Sales to new listing ratio for August 2012 was 0.55, down slightly from 2011. This typically will take pressure off of price appreciation.
The decline in sales activity experienced in August compares with the same relative rate of change in sales the past two years. This indicates a seasonal market adjustment, driven more by consumer behavior rather than mortgage rule changes in 2012 as a cause.
Affordability is a key driver for the housing market. Affordability remains at historic levels. Low interest rates have maintained affordability even as prices have risen.
Healthy immigration has contributed to maintaining demand. That along with domestic demand has contributed to maintaining a balance in the overall housing market.
It is never been more important for the consumer to have an expert interpret how their property is impacted by the market. That expert is not the media. By combining intelligent interpretation with acute awareness of market activity, we have never been in a better position than today to assist our clients.