Today’s Toronto Star has a very deceptive sub-headline in the middle of the front section. It reads “The average Toronto-area house is worth $41,672 less than it was a year ago. Sales are down 35 per cent and it’s going to get worse.”
At a glance this makes a great headline but here is the reality….$41,672 is a reduction of just over 10% in the average price since last October. Yes, no doubt the market has softened. The number of sales are down… but down from a record year. Remember, at this point one year ago, Buyers were rushing to avoid the new City of Toronto Land Transfer Tax that was coming into effect on January 30th, 2008.
The Bad News: Prices are Dropping and the Number of Sales are Down.
There has never been a record year like 2007 in the history of the Toronto Real Estate Board…fueled by the LTT and 2008 is now dealing with the effects of the new tax and the 2007 rush to buy to avoid it. So yes, activity is down, but down from a high of 7300 sales in October 2007 to 5100 in October, 2008. That is still a lot of houses and in the first two weeks of November there are already almost 2000 sales reported on the Toronto Real Estate Board.
The real story is that for the first time in years, there is more choice for Buyers, the rates are excellent, mortgages are in abundance and Toronto has net immigration of 150,000 people per year (the same population as Barrie, Ontario)….each year!!
The Good News: Buyers Can Negotiate.
Buyers can negotiate and most Sellers are selling to move up and become move-up Buyers. Moving up in a slower market is better than moving up in a faster market because the difference between what-you-sell and what-you-buy is probably less in a slower market. Focus on the difference between the two prices, do the math and you’ll see the opportunity a slower market allows.
Don’t get caught up in the doom and gloom…I was asked today if it was true that sales were at a 10 year low…I just checked statistics on Toronto MLS and the October 2008 prices are more than double what they were in 1998 and just under double the number of sales occurred.
Not to say that there are not concerns about the Canadian Economy or that the Real Estate market is not shifting…but it is important to keep things in perspective, do the research and read between the “Headlines”.
If you want to chat about buying or selling, feel free to call me at 416-322-8000 or email me at firstname.lastname@example.org.