An Amazing Toronto Real Estate Turn-Around: From 13% To 58% In Just 6 Months

In many cases, Toronto house and condo buyers have lost their ability to negotiate offers once again.

June was a record month for the Toronto Real Estate Board with 10,955 sales, up 27% from June 2008 and approximately 500 more sales than in the previous record set in June 2007.

Manufactured multiple offers are again prevalent with about 30-50% of listing agents deliberately underlisting the seller’s homes to generate an auction effect and competition. The max we’ve seen so far this year is 20 offers one evening on a semi-detached home on Hillsdale off of Mount Pleasant!

As usual it’s not uncommon for homes to sell at the same ‘market value’ that they would have without the multiple offers happening. Some purchasers have been caught up in the frenzy however and ended up overpaying by substantial amounts.

The average sale price for the month came in at $403,972, up 2.05% from June 2008. The year-to-date average is still down 3.2% from 2008 so all is not lost for buyers hoping to take advantage of low prices and still low interest rates.

Interest rates are remaining firm in the 4.4% – 4.5% range for a five-year term. This results in a monthly payment of about $5.11 per thousand of mortgage based on a 35-year amortization period.

The June ratio of sales-to-listings was 58.8% – the highest I’ve ever seen it since I started tracking this statistic back in 1992.

Besides the high number of sales, the other major cause for the ratio being that high is the low listing inventory – down 29.9% from June 2008 and, at 18,704, the lowest number I’ve seen this decade.

The condominium market was also very busy, reflecting a lower entry price point for first-time buyers.

Average sale prices in many areas were up only marginally with the exception of TREB District C08 (Yonge east to the Don River and north to Bloor) where the average rose 6.8%.

Part of this is due to the larger number of condo suites now available east of Yonge. Lower per-square-foot prices have been exciting for buyers – comparable to what happened in King West 5-8 years ago.

As you can see from the graph to the left, for single family homes the average sale price has leveled off somewhat over the past, although it is still on an upward slope.

This bodes well for those people who were trying to ‘time the market’ and buy at the absolute bottom. If you can put up with the potential multiple-offer frustration, you’ll be able to purchase a home at an affordable price.

Notice I didn’t say ‘get a deal’ though. Those days are over of course .

Taking a look at the graph to the right, you’ll see that the sales numbers were at their lowest in the December/January time frame.

Now, this is not unusual… it happens every year… BUT the same graph would almost identically map the ratio of sales-to-listings over the past 12 months which DOES indicate that the bottom was reached in those two months.

Back in December-January we had a 13% ratio compared to a 58% ratio now (24-28% indicates a neutral market).

I’m actually glad that interest rates popped up in June by 60 basis points – the mortage rates we had through the first 5.5 months of the year (below 4% for a 5-year fixed term) really were ‘emergency’ rates which weren’t needed any more.

The current 4.4% 5-year rate is appropriate for our times and is still very attractive to home buyers (about $4.70 per thousand of mortgage with a 35-year amortization).

So… start your research, learn about how the home buying process works and pick a knowledgeable, professional buyer agent to guide you through the home purchase.

If you need any help with that, a home buyer class might be helpful. Go to HomeBuyerAcademy.ca and see if this type of education is what you need.

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