"GTA home sales slide in July....Canadian home prices drop 2 percent in July....Number of transactions fall...Sales of condo, houses expected to slow across Southern Ontario..." For most homeowners like us, these sound bites make our hearts skip a beat or two. After all, our homes are our biggest investments in our lives.
Lately, the buzz has been on condo market in GTA so allow us to focus on this for now. FIrst & foremost, a reminder for all of us before we start getting into a panic mode... "Perspecitve on this market is key", George Carras of Real Net Canada writes.
Admittedly, real estate in Canada, specifically Toronto and the GTA, has seen new realities since the big global downturn in 2008. " NEW NORMALS" as some experts call it and here are some of them.
As most real estate markets in urban cities, Toronto & the GTA is comprised of Highrise Homes & the Lowrise Homes:
- Condos make up the highrise component of the new home market
- 2011 was a record year for condo sales in the GTA
- 2012 year-to-date highrise sales are at the 2nd highest level on record despite a 21% drop from last year's sales
- Lowrise homes (detached/semis/townhomes, links) comprise the other part
If you want a proper perspective on the highrise or condo market, it's important for us to look into what's been happening in the low rise market. Sales in the first half of 2012 saw the fourth weakest year on record. Why? One of the reasons is the record-low levels of available low-rise inventory, a result of the province's intensification policies with prices reaching a near high record level (law of supply & demand effect). This resulted in the biggest price difference between a new lowrise home and new highrise home of $170,846.
How are new total home sales (lowrise +highrise) been so far in 2012? During the first six months of the year, a total of 20,875 new homes were sold - down 14% from last year (which was the 2nd best year on record for total sales). However, comparing it to the long term average of 21,141 new homes for the same period, 2012 so far has been average. That's new homes.
What about highrise and lowrise inventories? With the record high highrise inventory of 20,133 units and a near record low lowrise inventory of 5,797 units, there are currently 25,903 new home options available to GTA buyers. Comparing this to previous years, over the long term, total inventories in the GTA have ranged between 25,000 - 30,000 units so the growth in highrise inventories is just helping to bring the total inventories back to the low end of the normal.
The new normal though is that highrise condos now dominate the market as a result of the province's intensification growth plan. Who among us ,especially firs time homebuyers, can easily afford $603,102.00 - the index price of a lowrise home in Toronto?
Reading the fine print:
"GTA home sales slide in July" ....Number of transactions fall, but average selling price keeps on rising. - Toronto Star, August 4, 2012
" Canadian home prices drop 2 percent in July"... Compared to Vancouver, Toronto prices held relatively steady with the average price in the GTA slipping slighty from $496k to $494,000. Actual home prices were up almost 4% in July from a year earlier.
"Sales of houses, condos expected to slow..." While the CMHC predictions may sound worrisome to some, Hildebrand termed the housing forecast “optimistic.” “We’ve been waiting for this moderation in the market to materialize for some time,” he said. “We’re starting to see homes sit on the market a little bit longer now and fewer instances of multiple offers. ”While high prices and tougher lending rules may shrink the ranks of eligible first-time buyers, “this is the ideal buying environment for somebody who is looking to move up in the marketplace.”
WARNING: Consuming limited facts may be hazardous to the health of your opinion. (George Carras)
And yes, I think its about time that the Toronto real estate market cools down a bit!