Toronto Resales Dropped in January, but Prices Continue to Climb
It looks like those that were worried about the spring market in Toronto can now put their fears to rest. New resale stats have been released by the Toronto Real Estate Board, and while there was a slight drop in home purchases over the month of January, prices continued to climb, and that spring market is starting to look good for the sellers and Realtors within it.
According to TREB, there were 4.375 resale transactions in the GTA in the month of January; a drop of 1.3 per cent from a year ago. Meanwhile, average resale prices continued to climb up to $482,648, a 4.3 per cent increase from January of 2012. These stats, says TREB, show that the market this spring will be much stronger than what was previously expected, and what’s been seen over the past few months.
“The January sales figures represent a good start to 2013. While the number of transactions was down slightly compared to last year, the rate of decline was much less than what was experienced in the second half of 2012. This suggests that some buyers, who put their decision to purchase on hold last year due to stricter mortgage lending guidelines, are once again becoming active in the market,” Ann Hannah, president of TREB, said in a statement. “It is interesting to note that sales were up for many home types in the GTA regions surrounding the City of Toronto. This is due, at least in part, to the additional upfront land transfer tax in the City of Toronto.”
Just how the land transfer tax – something that’s been fought aggressively by residents, and a tax that costs home buyers thousands of dollars – has helped boost sales in the GTA, which is what Ms. Hannah is suggesting.
Whatever the reason for the increased activity, TREB is also seeing it as a good thing, and a sign that the market will continue to be strong.
“There will be enough competition between buyers in the marketplace to prompt continued growth in home prices in 2013. Expect annual average price growth in the 3 per cent to 5 per cent range this year,” said Jason Mercer, senior manager of market analysis with TREB.
But we also question how this is good news. Prices are still going up, which is something that both Finance Minister Jim Flaherty and buyers about to enter the market would like to see. Add to that the fact that new listings continue to flood the market – with 10,624, a 10.7 per cent increase seen in January. That means that there was more than double the new inventory than there was actual sales during the month of January.
Going by traditional real estate cycles, it would be safe to assume at this point that as inventory continues to go up, and sales continue to go down, prices at some point will fall in line and will also have to drop some. This is something that TREB obviously doesn’t see as a problem. Do you?