January 08, 2013
Susan Pigg, Moneyville - Toronto Star
The lack of enough houses for sale in Toronto last year to meet demand helped boost the price of a two-storey home by 6.2 per cent, to an average of $668,133 year-over-year by the fourth quarter of 2012.Keith Beaty/Toronto Star
Toronto house prices are expected to flatline rather than fall in 2013 — gains should average just one per cent — with the “cyclical correction” that has taken hold since spring likely to be more short-lived than severe, according to a new report from Royal LePage.
“Very modest home price appreciation will be the norm for the next two years,” the realty company says in a national housing market survey released Tuesday, noting that further declines in Vancouver house prices, and the softening in Toronto’s condo market in particular, will have a “significant dampening effect” on Canadian average house prices in 2013.
However, fears of a “sharp or drawn out collapse are unwarranted,” it notes, adding that prices have simply outpaced wages for the last three years “and the market requires time to adjust.”
“The silver lining in every real estate market correction is that there is a balance shift,” says Royal LePage president Phil Soper in a statement. “ ... Canadian home buyers will see momentum shift in their favour this spring.
“They should be met with more choice — and stable prices.”
First-time homebuyers, who realtors and housing experts feared have been virtually locked out of the market by tighter mortgage lending rules imposed by Ottawa, “are adjusting to the new requirements by opting for cheaper homes or saving longer,” says the survey.
While bidding wars and bully bids dominated the busy spring market in 2012, come summer realtors began to see “a disconnect” between buyers and sellers: Buyers have been holding off, anticipating a slump in prices, while sellers have dug in their heels, determined to wait and see if spring 2013 brings some heat back to the cooling market.
The lack of enough houses for sale in Toronto last year to meet demand helped boost the price of a two-storey home by 6.2 per cent, to an average of $668,133 year-over-year by the fourth quarter of 2012. A detached bungalow climbed 4.9 per cent, to $558,345, during the same one-year period.
Toronto condos averaged year-over-year gains of 2.6 per cent, ending 2012 at an average $356,865.
“The pipeline of buyers in Toronto seeking single-family homes will remain strong throughout 2013,” according to Gino Romanese, a senior vice president with Royal LePage.
The condo sector is likely to soften further, with the exception of older, bigger condos in desirable Toronto neighbours that, says Romanese, “will likely outperform newer units that target investors and young professionals.”
Royal Bank CEO Gord Nixon told a banking conference Tuesday that the real estate slowdown is having an impact on mortgage lending but that the market is likely to remain solid, according to Canadian Press.
Nixon said RBC has little exposure to the condominium market, while Bank of Montreal CEO Bill Downe told the conference the bank pulled back on condo construction funding in the wake of the U.S. housing meltdown in 2007 and 2008.