GTA Real Estate Market Updates – Sept 2010

Even though sales for August this year is showing lower sales as compared to same time last year for real estate transactions in GTA, it is important to recognize that sales on the year were eight per cent higher than in 2009. The average price for August transactions was $411,012 – up six per cent compared to the average of $387,921 reported in August 2009. “Market conditions have remained tight enough to support higher home prices in comparison to last year. Under current mortgage lending standards, a household earning the average income in the GTA can comfortably afford the mortgage payments on an average priced home. Market conditions and the affordability picture would have to change dramatically before a sustained drop in the average selling price would take place,” said Jason Mercer, TREB’s Senior Manager of Market Analysis.
In a report released on Tuesday, Canada Mortgage and Housing Corp. predicts that existing home market conditions will remain balanced during the next two years as MLS sales ease and inventory levels remain elevated.
A recent Compas Inc. poll shows that business leaders expect a rise in residential real estate prices over the next 12 months by 1.75%.
There is a common belief, that mortgage rates can hammer the real estate market. A report by David Larock, Sr. Mortgage Planner from TMG-Toronto, educates the consumers on this issue
“Short-term (variable) rates aren’t going anywhere fast because:
1. The central bank’s primary reason for raising rates is to control inflation. Our inflation rate (as measured by the consumer price index) was at one per cent as of July 23, well below the central bank’s upper limit of two per cent.
2. The effects of higher rates are felt only over time, so raising short-term interest rates gradually allows the central bank time to measure the impact of previous increases before tightening further.
3. While the Canadian economic recovery is in full swing, most of the rest of the world is not faring as well. In its recent commentary, our central bank acknowledged that aggressive interest-rate hikes could stifle our momentum, especially against today’s backdrop of global economic uncertainty.
4. The U.S. Fed is not expected to increase its short-term policy rate until 2012 at the earliest. If our central bank keeps raising rates independently of the Fed, our dollar will continue to appreciate and this will slow our economy further. Most experts do not believe that Canadian short-term rates can be sustained at much more than one per cent above comparable U.S. rates (and we’re already 0.75 per cent higher).” Says David in his recent report.
A report, by Jim MacGee of the C.D. Howe institute, concludes that Canadian housing policies have done a good job to ensure that a U.S.-style housing market crash is not likely to happen here. “Canadian housing policies, which avoided the sharp decline in underwriting standards seen in the U.S, worked well in reducing the possibility of a housing bust in Canada during 2008-2009, and continue to mitigate the risk of a massive wave of defaults in the future,” says MacGee.
Overall to conclude, After a small correction in last two months, Canadian real estate Market can still be considered healthy, as it is still not showing negative returns. Small corrections like these are only considered as buying opportunity for investors and 1st time home buyers, rather than something alarming. With reasonable inventory and interest rates still being historically low, you can’t go wrong, if you buy under proper guidance. Still better than renting or investing in some volatile investment vehicles.

About GTA Real Estate Agent

Established, Experienced and Full Time Real Estate Professional specializing in Residential & Commercial Real Estate Buying & Selling Representation in Greater Toronto Area
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