An unexpected surge in summer deals has sent Toronto board scrambling to revise fall forecast
Aug 07, 2009
The renovated, four-bedroom home on Hanna Rd. in the leafy downtown Toronto neighbourhood of Leaside was expected to fetch a good price. The vendor was asking $949,000. Some agents figured it was deliberately under priced.
But no one expected the home to go for $286,000 over list when it sold last week amid multiple offers for a cool $1,235,000.
As a result of the summer surge of home buying, the Toronto Real Estate Board is now scrambling to revise its forecasts upward.
Despite the economic downturn, analysts now expect sales to match or surpass last year's 74,558 sales. The earlier estimate was in the range of 65,000 to 70,000.
Yesterday, the real estate board reported 9,967 sales of existing homes in July, up 28 per cent from the same time last year, the best such month on record. The average price of a home is $395,414, up 6 per cent from the same month last year.
The record sales and buoyant prices caught many realtors and buyers by surprise, especially after a rocky start to the year that saw sales plunge by half in January.
"I thought I would be able to get much more of a deal this year," said first-time buyer Renee Chong, 31.
Chong, who has been looking at condos for the past six months, said low interest rates lured her into the market. But she isn't in a hurry to buy if the price isn't right.
"I really don't want to get stuck in a bidding war and do something that I'm going to regret."
Historically low interest rates have fuelled the market, especially for first-time buyers. But not everyone expects the frenzy to last.
One reason for the healthy price increases in the Toronto market is a lack of listings – down 36 per cent in July compared with the same month last year. Less inventory means buyers have to compete against each other, resulting in multiple offers in popular neighbourhoods. This trend should ease in the fall as more move-up buyers place their homes on the market.
"Some sellers have held off listing their homes thinking they were probably not going to get a good price, but after this summer you will likely see these people back in," said Jason Mercer, the board's senior manager of market analysis.
In terms of listings, the best deals and most selection are in the west GTA neighbourhoods, according to a new Coldwell Banker report. "Buyers' best opportunities to negotiate price will tend to be where inventory is plentiful," said Andrew Zsolt, president of Coldwell Banker Terrequity Realty.
"It's a simple case of supply and demand."
West neighbourhoods such as Mississauga and Brampton had 6,697 units listed in July, twice as many as central and east areas, says Coldwell Banker. Central Toronto, where demand is traditionally high, had the lowest inventory with 2,569 homes on the market.
"There is a lot of immigration and population growth in the west, which has caused a lot of move-up buying and people to list their homes," Zsolt added.
Building permits in the Toronto area were also up by a greater than expected 1.2 per cent.
Developers took out $932 million worth of permits in June, compared with $921 million in May, with most of the bump in non-residential building.
Year-to-date permits are down 22 per cent in the Toronto area. Nationally, permits are up 1 per cent.