Multiple offers. Frenzied buyers. Higher prices.
In the middle of a recession, Toronto real estate has gone from a buyer’s market to what looks like a seller’s market. But can it last?
Some analysts say the spring fling will be exactly that – a quick bump up in numbers with a much more sombre fall to come.
“You had pent-up demand from the winter where nobody bought anything, and then these really low interest rates that brought everyone back into the market,” said Shaun Hildebrand, senior market analyst for Canada Housing and Mortgage Corp.
The Toronto Real Estate Board reported that 10,955 existing homes were sold in June – up 27 per cent from June of last year. The average home price was $403,972, up 2 per cent from 12 months earlier.
Analysts such as Hildebrand say the rebound appears remarkable, but don’t expect it to last. At least not until job numbers pick up substantially.
“I don’t think the housing market is on a solid enough footing to register the kind of growth we’ve been seeing going forward,” said Hildebrand. While the market is much more resilient than many analysts previously thought, it still isn’t firing on all cylinders and won’t be for some time, he cautioned.
“Shifting mortgage rates and a great unfreezing of confidence have resulted in a very strong wave of home buying in the GTA,” housing analyst Will Dunning said in a report. “But what really matters over longer periods is job creation, and the signals from the market are discouraging.”
The jobless rate in Ontario is forecast to climb sharply to 9.3 per cent this year, according to the Royal Bank of Canada. Last year it was 6.5 per cent.
Much of the weakness in jobs growth is focused on the manufacturing sector, and Ontario is particularly vulnerable, Dunning said. 
“I expect the short-term impacts of changing rates and postponed buying will soon pass and the GTA housing market will be weaker in the second half of the year,” he said.
One reason for the uptick in real estate is that remedies to fight the recession, such as low interest rates, have helped turn around the market.
Another reason is that active listings are down by 30 per cent from last year, meaning there are fewer properties to choose from. That causes prices to rise.
“The main reason to list is so you can buy something else,” Dunning said.
“Listings remain weak, which is another reason I think that this wave of buying won’t last much longer.”
Nevertheless, real estate agents such as Royal LePage’s Helena O’Connor did not expect to see multiple offers – where competing buyers bid up the price of a home – in the middle of a recession.
“It was a little surprising,” O’Connor said. “Buyers are really responding to the low mortgage rates.”
Sutton Group realtor Alicia Pang, who quit a comfortable job in banking to become a full-time realtor last year, had some doubts about her career choice over the winter. But she is very busy now.
“I got my licence just when there was a slowdown, so my timing could have been better,” Pang said. “But it worked out okay. I knew things would improve in the spring, but I never imagined the market would be this crazy.”
Pang said about 80 per cent of her clients are first-time buyers driven by record-low mortgage rates.
A one-year closed mortgage can be had for as little as 2.75 per cent, while a five-year closed rate can be found at 4.39 per cent, according to website Canadamortage.com.
“Because the listings are down, it’s hard out there for buyers,” Pang said.
“For choice properties, if you’re not out there on the first day, they’re gone.”
Toronto Star
http://yorkregionmortgages.blogspot.com/2009/07/june-home-sales-soar-27-per-cent.html
brought by Moishe Alexander , Canadian Funding Corp CEO
