Lately I"ve been asked by friends, family and even people I meet on the street who find out I"m in real estate, "I hear prices are going to drop by 25%. Prices are so high, it's about time."
My general response is the same. Yes, prices might drop by 25%, or they might go up even more! When we look at the information that is causing the prices to go up it really doesn't seem possible we will see a drop of 25%. Prices may go down but there's no reason for them to. Let's take a look at some of the data.
Real GDP Growth - Q1 2011 t3.9%
Toronto Employment Growth - June 2011 t2.7%
Toronto Unemployment Rate - June 2011 u8.4%
Inflation (Yr./Yr. CPI Growth) - June 2011 3.1%
Bank of Canada Overnight Rate - July 2011 1.0%
Crime Rate Toronto (Yr./Yr.) - u15.8%
Prime Rate - July 2011 3.0%
We have good job prospects, crime rates are down, interest rates are still the lowest ever and our growth is positive. Toronto continues to be a magnet for immigrants (job availability) . I expect that we will see more listings soon which will help ease price increases but we still have the same amount of land but as more and more people arrive, house prices will continue to improve. Click here for a complete report on the market for July of 2011.
The average selling price in July was $459,122 – up by almost ten per cent compared to the July 2010 average of $418,675.
"Tight market conditions have boosted the annual rate of price growth this year. However, the listings situation is starting to improve. A better supplied market later this year and into 2012 would lead to a more sustainable rate of price growth," said Jason Mercer, TREB’s Senior Manager of Market Analysis.