Tom Lebour, National Post

The first week of Decem­ber was a good week, eco­nom­i­cally speak­ing, for the Greater Toronto Area and Canada more broadly. We had two waves of pos­i­tive finan­cial news. First, Sta­tis­tics Canada announced the Cana­dian econ­omy grew in the third quar­ter – the first quar­ter of growth since the third quar­ter of 2008.

This was fol­lowed by encour­ag­ing employ­ment num­bers. In Canada, a whop­ping 79,000 jobs were cre­ated in Novem­ber and the unem­ploy­ment rate dropped slightly. In the Toronto area, we expe­ri­enced the fourth straight month of job creation.

This was the back­drop for another strong report from the Toronto Real Estate Board. November’s exist­ing home sales in the Toronto area were up strongly on an annual basis to 7,446 (up 105% from a depressed Novem­ber 2008, but within 2% of the total in Novem­ber 2007), and the aver­age home price climbed 14% to $418,460.

Jason Mer­cer, TREB’s senior man­ager of mar­ket analy­sis, points to the strong link between the hous­ing mar­ket and renewed growth in the econ­omy: “Eco­nomic recov­ery to date has been con­sumer dri­ven, with hous­ing play­ing a key role. The fact that the Toronto real estate mar­ket has remained afford­able over the past decade, cou­pled with record low mort­gage rates, meant that as con­sumer con­fi­dence recov­ered, home own­er­ship demand rebounded very quickly.  These trans­ac­tions resulted in spend­ing that ben­e­fited other sec­tors of the econ­omy, includ­ing such finan­cial and pro­fes­sional ser­vices as mort­gage bro­kers and lawyers, ren­o­va­tion and repair con­trac­tors, mov­ing and stor­age com­pa­nies and home fur­nish­ings retail­ers to name a few.“

By all accounts, when the final resale num­bers are released for Decem­ber, total sales will likely align with the healthy results we had in 2004 through 2006. This will rep­re­sent quite a recov­ery from the lows in sales and price we hit at the begin­ning of the year.

With that said, how­ever, it is impor­tant to point out we will not see sus­tained double-digit rates of growth in sales and aver­age price mov­ing forward.

“Right now,” Mr. Mer­cer says, “we are com­par­ing sales and prices in the recov­ery phase of the hous­ing mar­ket cycle to last winter’s decline phase, when the demand for own­er­ship hous­ing dropped sharply over a very short period of time. After the first quar­ter of 2010, reported rates of growth will not be as large because we will be mak­ing com­par­isons to the stronger sales and price num­bers from this past spring and sum­mer.“

I think, if asked, most Toronto real estate agents would say they expect more home­own­ers to list their homes for sale next year as they react to the strong sales and price growth in the sec­ond half of 2009. Mr. Mer­cer says that “with more homes to choose from, mar­ket con­di­tions will be more bal­anced in 2010 and aver­age annual price growth will be more in line with the long-term aver­age. To put this in per­spec­tive, the aver­age annual rate of price growth has been approx­i­mately 6% since the turn of the new mil­len­nium.“

I am happy that as we move through the hol­i­day sea­son, we are start­ing to hear more good news than bad on the eco­nomic front and that growth in the Toronto real estate mar­ket is expected to con­tinue at a sus­tain­able pace next year. I wish you all a safe and happy hol­i­day sea­son and look for­ward to com­mu­ni­cat­ing with you in the New Year.

Tom Lebour is pres­i­dent of the Toronto Real Estate Board, a pro­fes­sional asso­ci­a­tion that rep­re­sents 28,000 real­tors in the GTA.

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