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01/08/2010

Comparative Housing Prices (October 2009 Average Price)

October residential sales from the Toronto Real Estate Board (which includes areas as far north as Innisfil, and as far east and west as Bowmanville and Burlington) in 2009 were almost up by 3% from one year ago Oct 2008.

After a short dip in the winter, the average home price in the GTA has rebounded because sales have been high relative to listings.

 Comparative Housing Prices October 2009 Average Price

The resale market has really come back.  I've seen a lot of multiple offers in all price ranges happening, and a very short supply of homes in Orangeville!

Orangeville 08 vs 09

Remember I said resale and NOT the new developments popping up. Two questions that are being asked as the market enters 2010: Is this the 'Bubble' and why isn't the new sale market part of the come back?

OK, let's first discuss the 'bubble. Doomsayers want you to now believe that this market resurgence is only temporary and that we are heading downwards again by the Summer. Their rationale is that we are still in a worldwide economic recession and that it's time for real estate to enter a bigger decline after years of increases.

But all the economic indicators tell you that the housing market is sustainable at these levels. While unemployment is higher, unemployment is no way near the levels of the 80's and 90's. Affordability - real estate prices, mortgage rates, and incomes added together - is the best (lowest) it has been in the last ten years. Even if interest rates increase by 2% which would make sense and more homes are listed, home prices will stabilize as we enter the spring market.

We have no foreclosures in the Canadian market unlike our neighbours to the south- in fact we have a shortage of listings in the resale market and a sale to listing ratio of 68% in Orangeville when a normal market is about 35%.  Meaning, for every 100 homes listed, an average market will absorb 35 of them per month (or about a 3 month supply).  Right now, there are some neighbourhoods in the GTA and/or types of homes are in and around nearly 100%.

Finally there has been no price 'bubble' - just prices returning to levels of 1 year ago - the historic rate of increase for real estate.  Once more homes come onto the market the prices will adjust accordingly.

The earlier correction towards the end of 2008 and early 2009 was only caused by a lack of consumer confidence and not from underlying economic issues.

What's in store for 2010?

Stay tuned.

Posted by on 01/08/2010 |

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