Buyers catch a break as house prices dip
The average price in September was $393,647, down 6% from a year ago
By Jennifer Lewington - Globe and Mail
A cooling house market, confirmed in sales figures released yesterday by the Toronto Real Estate Board, means the pendulum has swung in favour of buyers.
In September, home sales in Toronto dropped 11% to 2,546, compared with the same month in 2007 - a record sales year.
They were down 5% from 2006, a more typical year.
The September sales drop follows a modest 1% decline in August, which was the first time since 1996 that prices fell from the same month of the previous year.
Also in September, the average house price dropped 6% to $393,647, compared with September, 2007, but was still 6% higher in value than September, 2006.
As symptoms of a slowdown - but not a collapse - Toronto real estate agents report fewer multiple bids, houses on the market longer than usual and less speculation after a long run-up in prices since the end of the last downturn in 1996.
There is a shift in strategy, with sellers less likely to under-price their homes in hopes of a bidding war and more likely to set a realistic price that ensures a sale within 1 or 2% of the asking price.
It’s a lot different than a year ago, with buyers apprehensive about wild stock-market gyrations on both sides of the border and concerns of a slower economy.
Most buyers have become more selective, with less speculative action in buying and selling of homes. There’s been a bit of an adjustment in price.
Despite the drop in sales and average prices, business analysts see no sign of a dramatic tumble of a scale witnessed in recent months in the United States.
Citing the latest Toronto Real Estate Board statistics, University of Toronto professor of real estate and urban economics William Strange says, “There is not an optimistic interpretation of these numbers, nor does it mean we are talking about doom and gloom like Florida and California.”
In a press release, Toronto Real Estate Board president Maureen O’Neill blamed the city of Toronto’s land transfer tax, imposed earlier this year, for some of the drop in sales. The 11% decline in Toronto is steeper than the 6% drop last month for the Greater Toronto Area as a whole. “We remain concerned about the land transfer,” she said in the statement.
On an average house price, the city’s land transfer tax is about $3,700 - on top of a similar amount collected by the province - with an exemption for first-time buyers.
The tax remains an annoyance to some, but Mr. Veinot says “people have gotten over the land transfer tax,” with economic worries looming larger in their decision to buy or sell.
City budget chief Shelley Carroll (Ward 33, Don Valley East) says the city tax “is one of many factors” in a home purchase, noting the sharp run-up in sales prior to its Feb. 1 implementation.
AVERAGE HOUSE PRICE IN THE CITY OF TORONTO
Sept. 2006: $371,682
Sept. 2007: $420,182
Sept. 2008: $393,647
VOLUME OF SALES
Sept. 2006: 2,680
Sept. 2007: 2,854
Sept. 2008: 2,546
SOURCE: TORONTO REAL ESTATE BOARD
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