Toronto real estate market stays hot
Toronto home sales continue to soar, thanks to an upswing in consumer confidence paired with lowered interest rates, market experts say.
“As we become more confident that we will begin to see economic recovery at the end of this year and even more so as we move through 2010, confidence has rebounded in people’s ability to purchase and pay for a home over the longer term,” said Jason Mercer, the Toronto Real Estate Board’s (TREB) senior manager of market analysis.
This week, TREB reported mid-month sales of 3,666 – a 84% increase from last November.
Sales for the month of October totaled 8,476, with new homes representing 4,150 of these – according to the Building Industry and Land Development Association (BILD), a more than 100% increase and the highest monthly total since July, 2007.
Derek Burleton, the Toronto-Dominion Bank’s associate vice-president and director of economic analysis, credited not only low interest rates but the strength of Canada’s banking system as well as the unleashing of pent-up demand previously contained by the recession.
He warned, however, of TD Economics forecasts that see a hike in interest rates by 2011, as the Bank of Canada brings them to “a more normal level.”
Stephen Dupuis, BILD President and CEO, said home buyers still have some time to capitalize on low interest rates, which are holding below 5%. “The Bank of Canada has been clear that they’re going to hold those rates at least until next July, and potentially longer,” he said.
The cost of homes have also continued to climb, with TREB mid-month average prices of $415,066 in the GTA – a 10% increase from this time last year.
Scotia Capital economists recently warned the housing market has become over-valued, saying speculation has swelled prices.
But Mr. Mercer said the percentage of income going toward principal interest payments and property and utility taxes have remained “pretty flat,” and should protect against the threat of a bubble forming in the market.
Mr. Dupuis is also confident that talk of a market bubble is unwarranted. “I find it actually quite interesting that we’re even talking about the ‘B’ word when six months ago we were talking about a bust,” he said. “We haven’t even gotten to boom yet, and people are already speculating about the bubble.”
Mr. Dupuis said bidding wars in the resale market may be to blame. “That’s probably not healthy, but I think that’s going to change fairly quickly – we just need to get the listing ratio up a bit,” he said.
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