Richard Sil­ver – Toronto Sun

Each Jan­u­ary many of us set goals for the year ahead, tak­ing into account house­hold finances and broader eco­nomic cir­cum­stances. One key yard­stick of our nation’s econ­omy is the real estate mar­ket, which in Toronto came to a strong fin­ish in 2011, mak­ing it the sec­ond best year on record with 89,347 trans­ac­tions, up four% in com­par­i­son to 2010′s 86,170 sales.

Last month alone, a total of 4,718 homes changed hands, rep­re­sent­ing a seven% increase over the 4,395 sales reported in Decem­ber 2010.

Con­sis­tent with the month’s strong sales, sell­ers’ mar­ket con­di­tions con­tin­ued, with the amount of time that homes were avail­able for sale aver­ag­ing 32 days last month com­pared to 37 days a year ago.

Year-over-year sales growth in the 905 Region out­paced that of the City of Toronto in Decem­ber, with increases of more than 12% and seven% respec­tively. In total 2,770 sales took place in the 905 Region while 1,948 trans­ac­tions occurred in the City of Toronto.

The num­ber of homes newly avail­able for sale in Decem­ber also increased, by nearly 14% com­pared to a year ago, with 4,811 new list­ings last month. Despite the increase in avail­abil­ity, sales gen­er­ally kept pace with new sup­ply, result­ing in con­tin­ued price growth.

The aver­age cost of a GTA resale home increased 4% year-over-year to $451,436. Gains were stronger in the 905 Region, with the Decem­ber aver­age price climb­ing nearly 6% to $435,378 and the City of Toronto show­ing a 2% increase in its aver­age price, to $474,270.

For all of 2011, the aver­age sell­ing price was up by 8% to over $465,000 in com­par­i­son to the aver­age of $431,276 in 2010.  We expe­ri­enced mod­er­ate to strong price growth through­out 2011 because mar­ket con­di­tions remained very tight because of strong sales growth cou­pled with a decline in list­ings.  Enhanced com­pe­ti­tion between buy­ers led to strong upward pres­sure on sell­ing prices.

We can see just how tight the hous­ing mar­ket has been in the GTA over the past two years when we con­sider a new indi­ca­tor pub­lished by TREB: Months of Inven­tory (MOI).  MOI tells us how long (in months) it would take to com­pletely sell the aver­age num­ber of active list­ings over the past 12 months given the aver­age num­ber of sales over the same period.  A lower num­ber of months indi­cate tighter mar­ket con­di­tions and vice-versa.  Over the past two years, MOI has been in the 2.0 to 2.5 months range.  This is sub­stan­tially lower than the pre-recession norm of between 3.0 and 3.5 months.

Despite price growth, the cost of home own­er­ship remains afford­able, due to low inter­est rates and a sta­ble employ­ment pic­ture.  Five-year fixed rate mort­gages con­tinue to be avail­able at approx­i­mately 3% while Toronto’s unem­ploy­ment rate came in at 7.8% in Decem­ber, an improve­ment of more than half a per­cent­age point from the pre­vi­ous month.

More­over, favourable news regard­ing our coun­try con­tin­ues to be gen­er­ated.  A recent study release by the Lega­tum Insti­tute, which mea­sured the world’s most pros­per­ous nations ranked Canada as the sixth best coun­try in the world based on cri­te­ria that have an effect on eco­nomic growth and per­sonal well being. The flood of favourable reports on our coun­try in recent months has been tem­pered though by warn­ings from the Bank of Canada and the Inter­na­tional Mon­e­tary Fund regard­ing Cana­di­ans’ high house­hold debt.  This cou­pled with the poten­tial impact of other nations’ volatile economies should give all Cana­di­ans pause for thought.

It is a fis­cally con­ser­v­a­tive approach, with respect to lend­ing prac­tices for exam­ple, that has landed our Canada at the top of so many world rank­ings, and we should con­tinue to exer­cise the same pru­dence with respect to house­hold finances.  There’s never been a bet­ter time to begin a new mort­gage in order to con­sol­i­date debt or per­haps even to move to a home bet­ter suited to your lifestyle.

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Con­tact the Jef­frey Team for more infor­ma­tion – 416−388−1960

Lau­rin & Natalie Jef­frey are Toronto Real­tors with Cen­tury 21 Regal Realty.
They did not write these arti­cles, they just repro­duce them here for peo­ple
who are inter­ested in Toronto real estate. They do not work for any builders.
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