For those concerned about the possibility of a real estate market bubble and crash, it looks like the Toronto marketplace can send a ‘Thank You’ note to that long brutal extended winter chill we had.
While the federal government’s moves over the past few years to rein in Buyers by creating stiffer lending criteria has certainly quelled the unbridled enthusiasm to own property in Toronto, we believe weather has played a significant factor in stabilizing our marketplace. Those cold wintry days of March, April and May kept a lot of people from venturing out in the crushing droves we typically see during those months (which was still intense – click HERE to ready our caustic take on the Spring Market). With the cold slushy rain-then-snow-then-rainy weather delaying the Spring market, by June, under the threat of an increase in mortgage rates (which did, in fact, transpire), Buyers swarmed the streets and continued the madness snapping up property, more often in competition.
We certainly felt the momentum ourselves, where a number of our Buyers were shut out in bidding wars. One of our tales even made the papers when our Buyers competed against 16 others on a cute semi-detached house at Danforth and Coxwell which was listed at an aggressive $499,000 list price. It shot up 25% over the asking price, setting a new precedent for the neighbourhood. Click HERE for that article in Reuters.
If you ask any realtor, the one complaint we collectively have is over the lack of listings. There is so little good product available! This diminishing supply of properties for sale is placing enough pressure on the market that freehold properties are continuing to rise in value while condominiums are holding their own. A lack of supply like this isn’t new to Toronto. Last Spring we published a piece called “Where Are The Listings?” which identified three factors impacting the shortage of property. They included the high costs associated with renovation and the resulting slimming profit margins were causing house flippers to retract from the market (the high-earning busy professional market rely on this group to supply turn-key product); the costs of raising children which has stymied the abiltiy for the middle cohort of the market to climb the property ladder and; the high costs of moving including the double land transfer taxes and other closing costs associated with buying and selling in Toronto which are keeping people in their places. You can click HERE to read this article.
As we move into July it will be interesting to see if our Summer market becomes sleepy, as it often does. Typically Buyers begin exiting the market due to a lack of product, a propensity to feel fatigued after a long period of looking for the right place, and their own commitments to celebrate summertime activities like weddings, vacations, barbecues, and drinking on patios. Click HERE for our newsletter called The Seasons To Real Estate.
However, with a lot of buyers clutching pre-approved mortgage approvals with interest rates as much as half a percentage point below what Buyers would otherwise secure today (many which expire over the next 45 to 90 days), we may see a hot summer market both in prices and weather!
Click HERE to see the June 2013 Toronto Real Estate Boards summary sheet on prices by dwelling type and area code. And HERE’S an article in today’s Toronto Star summarizing both Toronto and Vancouver, and HERE’S one in yesterday’s Globe and Mail that tell the tale.
And stay tuned for more Tales From The Real Estate Trenches!
~ Steven and the urbaneer team
Tales From The Real Estate Trenches