After a crazy frantic first half of the years sales in the GTA real estate market have finally dropped.
Prices have declined from the peak they reach earlier this year by roughly 5%.
However, currently prices are still above 2009 prices.
In the first half of the year the market was fueled by first time buyer activity.
The government changed the rules on first time buyers so many rushed to get in just under the wire. Currently stricter mortgage guidelines are in place.
This was done with the expectation that interest rates would rise & make mortgages unaffordable for 1st timers in 3 to 5 years when their mortgages came due.
Also investor guidelines were changed forcing investors to put a larger sum of money into the property they purchase.
This of course slows down the invetor marketplace.
The looming HST did effect some buyers but it is not payable on the purchase price of resale homes, only on the associated services such as lawyers fees,commissions and other closing costs. Realtors generally are finding that the HST has affected the volume of sales due to the fact that many people do not understand how it is being applied to the purchase of real estate.
Greater Toronto REALTORS® reported 6,232 sales through the Multiple Listing Service® (MLS®) in August 2010. This represented a 22 per cent decrease compared to the 8,035 sales recorded during the same period in 2009. New listings decreased by one per cent year-over-year to 10,488.
The average price for August transactions was $411,012 – up six per cent compared to the average of $387,921 reported in August 2009. However to put that in perspective 2009 had a strong market downturn in the market where values dropped about 15% over a 9 month period before bouncing back up. July 2010 average price was about $420,000.
Since the spring there has been a big drop in the # of listings coming on the market. In fact we are at almost a record low.
July was the lowest level for new listings since 2002.
Currently the market has shifted and folks who already own homes are now at a roughly 50/50 marker in terms of driving sales.
With just over 10,0000 NEW listings on the market and sales of 6232 units in August, purchases of those listings are now driving those folks to put their homes on the market. So resale buyers and sellers and first time home buyers are currently about equal in terms of driving sales. Also the tight supply helps to maintain prices.
The entry level or 1st time buyer level $300-$500,00 range is currently driving 50% of sales. Usually we would see this in the 60-70% range. So this simply means that a larger % of folks bought earlier in the years due to the gov’t rules changes as overall sales for the year are holding strong.
Overall the market appears to be normalizing which means a reasonable drop in volume and corresponding price but nothing to worry about at this point in time.