Incorrect Interpretation Of TREB Stats May Cause Buyer To Miss Out

Thanks to one of our readers I was prompted to review the Toronto Real Estate Board sales stats going back to 2002 and look at the average sale price in December vs January of the following year.

The reader commented that I had missed the fact that the December Toronto average price of close to $395,000 was followed by a precipitous drop to $374,449 average in January 2008.  He, erroneously I believe, thought that nirvana had happened and this meant prices were going to drop in 2008.  He had been sitting on the fence for several years holding off purchasing and waiting for the ‘perfect moment’.

Unfortunately for him, I think he drew the wrong conclusion from the stats!

Now I can’t fault him for believing that when looking at the information laid out to the left in this chart except for one fact…

December was realistically the last month move-up buyers could sell and purchase and close prior to January 31, 2008 and avoid the new 1-2% City of Toronto land transfer tax taking effect February 1st!

Anyone who is not a first time buyer must pay this tax if the home they’re purchasing is in the City of Toronto (see earlier articles in this Blog for complete land transfer tax details)

When I looked at the Toronto real estate sales stats going back to 2002, I discovered that January 2008 was indeed an anomoly… every other year had the January sales price higher than the previous December.

My belief is that January had proportionally fewer move-up buyers than normal.  In fact, first-time buyers were more encouraged than ever to purchase since the Province of Ontario made a credit on the Provincial land transfer tax (no tax on the first $227,000 of purchase price) now available to first-time buyers of resale houses and condominiums.  This had only been allowed previously to brand new home purchasers (see our Blog article Week 43 – October 27th for complete City Of Toronto land transfer tax information).

Of course, hindsight is 100% so we’ll keep an eye on stats in the upcoming months to see if the Toronto land transfer tax does impact sales.  So far, our Team’s buyers are taking it in stride and it doesn’t seem to be affecting their enthusiasm for finding that larger home.

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