Toronto Real Estate Sales Show a Softer Market

Here's a copy of the complete press release from the Toronto Real Estate Board:

Moderate sales and healthy price increases continued to characterize the GreaterToronto Area resale housing market during the first half of May, Toronto Real Estate Board President Maureen O’Neill announced today.

“With 4,422 sales throughout the GTA in the first two weeks of this month, activity has declined 12 per cent compared to the 5,003 homes sold during the first half of May 2007,” said Ms. O’Neill. “Prices however, continue to be strong, averaging $400,817 in the GTA, up six per cent from the $377,612 reported a year ago.”

Canada’s housing market definitely slowing

There is now convincing evidence that Canada’s housing market has come off the boil, Bank of Nova Scotia economists say.

Home resales have fallen for four consecutive months, and the inflation-adjusted average resale home price registered its first quarterly decline in seven years during the first three months of this year, Scotia Economics noted in a report last week.

“Cracks are appearing on the new home front as well,” the bank said, as demand for new residential building permits has fallen sharply and price increases are moderating as inventories of unsold homes trend higher.

Calgary real estate

Calgary's MLS listings are "totally out of whack," surpassing 10,000 in April and growing by the day while sales are slumping.

Listings for single-family homes and condominiums have hit an all-time record.

April MLS sales of single-family homes (1,363) in Calgary metro were the lowest for the month since 2000 while condo activity (581 sales) was the slowest since 2003 -- even before the years immediately leading up to the city housing market boom in 2006 and 2007.

Westmount real estate

Top price of the year involved 55 Belvedere Place, one of the sections of the former Noah Timmins mansion which was split apart in 1962, which changed hands for $5.25 million, less than the other section of the massive building, at 65 Belvedere Place, which sold for $5.6 million in September, 2006. That price was the only sale above $4 million last year, with the next-highest price involving 4334 Westmount Avenue, corner Argyle Avenue, which sold for $3.8 million.

The lowest price in 2007 was registered in the $379,000 sale of 6 Burton Avenue, the only sale last year below $400,000, while close by one of the new townhouses at 4860 St. Catherine Street brought the next-lowest price, $415,000. Both sales were registered in February. The Burton avenue sale was 15 per cent lower than its municipal evaluation, but that was not the biggest markdown of the year; that involved 4337 Westmount Avenue which sold for $900,000, some 26 per cent lower than its tax assessment.

Forecasting Toronto’s Real Estate Market

When looking at forecasts for Toronto’s real estate market, or any market for that matter, it’s important to understand that these predictions are only as good as the information that experts have at the time. Unexpected shocks or changes to the market can impact the accuracy of a forecast. For example, the introduction of 40-year mortgages had a significant impact on Toronto’s real estate market in 2007 (see my previous post, Extended Amortizations and Toronto's Real Estate Market: Real Opportunity or Bubble Booster?). Roughly 10,000 more people bought homes in 2007 than in either 2004,2005 or 2006. Much of this increase had to do with the fact that housing suddenly became more affordable, driving up demand in that year.

So why didn't experts anticipate this surge in demand in 2007? One possibility is that forecasts for a slowdown were announced before CMHC introduced the 40-year mortgage. Another possibility is that forecasters who did take the 40-year mortgage into account, underestimated the impact it was going to have on the market.