Posted 8.21.13 @ 8:46
Toronto’s housing market has seen some ups and downs over the last year, but July has seen an 8% increase in selling prices bringing it up to $514,250 on average. Fewer homebuyers are coming out to buy, which may be due to awkward market conditions and some of the mortgage rule changes Canada saw last year. Sales in the Toronto area alone were up 16% compared with July 2012, clocking in at about 8500 new homes sold.
While the amount of homes sold may be a little less compared with the hay-day of two years ago, sales are again on the rise in the GTA. Sales were up by 16% compared with July 2012 year on year; this number can be a bit skewed though since that was a month after the new mortgage rules came into effect. The data released earlier this month is showing that the GTA had 8,544 sales in July, a huge jump of almost 20% compared with 2012 – making it the third best July on record for sales across the Greater Toronto Area.
New Mortgage Rules Caused a Bumpy Year
The last half of 2012 and the first half of 2013 were very bumpy, even by Toronto real estate standards. Luxury homes for sale didn’t seem to suffer the same kind of dramatic effects that the low to midrange housing market did. Prices were extremely high, with a jump of 8% year on year for an average home price of $513,250. So while many people aren’t buying a home right now, they are paying more and more for what’s available. That’s what makes the Toronto situation so interesting, especially since so many analysts have been talking about a major market correction coming this way.
Serious Market Correction Ahead?
Many economists, even Paul Krugman, think that the market is headed for an especially harsh correction. Prices have been climbing even with market woes on the horizon, and valuations across Canada are trending 50% higher than the American housing price on average. It really just depends on who you ask to find out which way the market is moving.
Bears see the market heading towards a correction but welcome it; bulls believe that the mortgage rules that came into effect last year will help make a soft landing for when the market does correct. A soft landing is important, because the harsher the fall the greater the time to recovery.
Condo Market Seeing Gains
One of the surprising turns of the year is that the condo market across Toronto is starting to make a comeback. While most buyers are interested in single family detached homes, dubbed “low rise” homes, many are starting to look at condos as a solution for skyrocketing real estate, especially when it comes to luxury homes for sale. The condo inventory across the GTA and Canada in general remains high, which is pushing prices lower and driving demand in certain markets.
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