Discover Why The Toronto Real Estate Buyer’s Market Might Be Over

The signs are everywhere… both here in Toronto and in the US markets. Buyers are starting to buy again!

The principle is simple. When the cost of home ownership (combining home prices and mortgage rates) get low enough, people start to see the value of owning compared to renting.

In the US, February sales were up 5% compared to one year ago. In the US Northeast, sales were up 16% and condominium sales overall were up 11.4%. Mortgage rates south of the border are at six-decade lows right now.

Although, in many markets, foreclosures take up almost 50% of the sales each month, agents are seeing multiple offers on some of them due to the low prices (often below the cost of construction for 1-5 year old houses). The Miami Herald newspaper was quoted recently saying “Buyers are starting to think that prices are where they should be and that the market is near a bottom”.

The stock market experts are starting to talk about an economic recovery from the ‘Great Recession’ by the end of 2009 to early 2010. Although jobless numbers are still high, the psychological effects of the G20 meeting recently in London are definitely positive.

Our Toronto real estate market is really blessed. Out of almost 23,000 Toronto Real Estate Board MLS listings available for sale, a miniscule 0.80% are Power Of Sale have-to-sell homes (properties being sold by lenders – our equivalent of foreclosure in the US).

As a result, we have not been faced with the severe downward pressure on prices that many US markets have encountered.

The ratio of sales-to-listings is the Toronto real estate market statistic that I’ve been following since 1992. If you’re a frequent reader of my posts, you’ll know that a neutral market is 24-28%. Above that is a seller’s market and below 24% is a buyer’s market.

Ratio Rises In Last 60 Days

Looking at the graph of sales-to-listings above for the period from January 2008 to March 2009, you’ll see that we hit a low of around 13% during the months November, December and January and then the ratio started to climb again. By the month of March the ratio was back up and in high neutral-market territory at 26.8%.

As I described in my Market Direction Curve blog article back in early January, it’s impossible to know where the bottom is until after the fact. Maybe, based on the bar graph above, we’re at Position B on the Market Direction Curve sketch right now and the bottom has already passed.

Currently we have interest rates for a 5-year fixed term ranging from 4.05% to 4.19% – historic lows! Back in January this same mortgage was 4.99% making the monthly savings on a $300,000 mortgage payment to be about $160 – just in 3 months. Combine this with Toronto home price declines of about 10-15% since last September and it’s no wonder the market is moving faster now.

Our Team’s Client Coordinator, Neil Harris, was recently booking buyer showing appointments for Sally. Of the 30-some listings he called on, 16 of them were already sold or had multiple offers on them already after just a few days on the market.

So… what should you do? Stay on the sidelines or maybe start to dip your toes into the market? Perhaps the perfect place for you to start is by going to a class on home buying. There are several available in different locations across the city… click here to see what your options are.

In the April Globe On Business magazine, when asked what his take was on the US economy, Gene Simmons responded “This is a great opportunity for you to stop spending stupid money, stop smoking, stop drinking, stop ruining your health and paying for the privilege. Take all that money, all the stupid money and buy. But don’t buy stupid stuff. Buy real estate. Buy important things. It’s the best time – the price is low”.

Wise words in my opinion .

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