Susan Pigg – Toronto Star

Toronto house prices are expected to flat­line rather than fall in 2013 — gains should aver­age just 1% — with the “cycli­cal cor­rec­tion” that has taken hold since spring likely to be more short-lived than severe, accord­ing to a new report from Royal LePage.

Com­ment: Actu­ally they pre­dict a 1% price increase NATIONALLY, not in Toronto. Same as Remax, 1% aver­age NATIONAL price gains. I think Toronto might see some­thing that low, but more likely in the 3–5% range. Depends what hap­pens with con­dos and what the mar­ket as a whole does in the spring.

“Very mod­est home price appre­ci­a­tion will be the norm for the next two years,” the realty com­pany says in a national hous­ing mar­ket sur­vey released Tues­day, not­ing that fur­ther declines in Van­cou­ver house prices, and the soft­en­ing in Toronto’s condo mar­ket in par­tic­u­lar, will have a “sig­nif­i­cant damp­en­ing effect” on Cana­dian aver­age house prices in 2013.

Com­ment: Mod­est appre­ci­a­tion, but appre­ci­a­tion to be sure. Cer­tainly not the stu­pid 25% drop that some have pre­dicted. The same drop that has yet to materialize…

How­ever, fears of a “sharp or drawn out col­lapse are unwar­ranted,” it notes, adding that prices have sim­ply out­paced wages for the last three years “and the mar­ket requires time to adjust.”

Com­ment: But prices and wages do not cor­re­late, they never have. Wages and monthly costs are what mat­ter. In 2010 the aver­age price was $431,276 with mort­gage rates around 4% – for a monthly cost of $1,833. In 2012 the aver­age price was $497,298 with a mort­gage rate of around 3% for a pay­ment of $1,901 – $68 more per month, about 1.2% per year. Wages increased around 2% annu­ally dur­ing the same time. So no, there is no real dis­par­ity between wages and monthly car­ry­ing costs.

“The sil­ver lin­ing in every real estate mar­ket cor­rec­tion is that there is a bal­ance shift,” says Royal LeP­age pres­i­dent Phil Soper in a state­ment. ” … Cana­dian home buy­ers will see momen­tum shift in their favour this spring.

“They should be met with more choice — and sta­ble prices.”

Com­ment: But once buy­ers sense it is their mar­ket, they will come out droves – which will cre­ate com­pe­ti­tion and will likely push prices back up again.

First-time home­buy­ers, who real­tors and hous­ing experts feared have been vir­tu­ally locked out of the mar­ket by tighter mort­gage lend­ing rules imposed by Ottawa, “are adjust­ing to the new require­ments by opt­ing for cheaper homes or sav­ing longer,” says the survey.

Com­ment: And it is the sav­ing longer that is going to be telling. Do they come back in the spring and sum­mer, after 9 months or a year of extra sav­ing? That is what will truly tell us the state of the Toronto real estate mar­ket – and the national hous­ing mar­ket as well.

While bid­ding wars and bully bids dom­i­nated the busy spring mar­ket in 2012, come sum­mer real­tors began to see “a dis­con­nect” between buy­ers and sell­ers: Buy­ers have been hold­ing off, antic­i­pat­ing a slump in prices, while sell­ers have dug in their heels, deter­mined to wait and see if spring 2013 brings some heat back to the cool­ing market.

Com­ment: And as long as the sell­ers hold out, the buy­ers have noth­ing, no bar­gain­ing position.

The lack of enough houses for sale in Toronto last year to meet demand helped boost the price of a two-storey home by 6.2%, to an aver­age of $668,133 year-over-year by the fourth quar­ter of 2012. A detached bun­ga­low climbed 4.9%, to $558,345, dur­ing the same one-year period.

Com­ment: And the gold stan­dard 2-storey detached is flirt­ing with $900,000!

Toronto con­dos aver­aged year-over-year gains of 2.6%, end­ing 2012 at an aver­age $356,865.

“The pipeline of buy­ers in Toronto seek­ing single-family homes will remain strong through­out 2013,” accord­ing to Gino Romanese, a senior vice pres­i­dent with Royal LePage.

The condo sec­tor is likely to soften fur­ther, with the excep­tion of older, big­ger con­dos in desir­able Toronto neigh­bour­hoods that, says Romanese, “will likely out­per­form newer units that tar­get investors and young professionals.”

Royal Bank CEO Gord Nixon told a bank­ing con­fer­ence Tues­day that the real estate slow­down is hav­ing an impact on mort­gage lend­ing but that the mar­ket is likely to remain solid, accord­ing to Cana­dian Press.

Nixon said RBC has lit­tle expo­sure to the con­do­minium mar­ket, while Bank of Mon­treal CEO Bill Downe told the con­fer­ence the bank pulled back on condo con­struc­tion fund­ing in the wake of the U.S. hous­ing melt­down in 2007 and 2008.

—————————————————————————————————–
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.
—————————————————————————————————–

toronto home appre­ci­a­tion per year

Related posts:

1. Low mort­gage rates keep Toronto real estate mar­ket alive Long term rates seem to be an espe­cially good deal,…
2. Toronto real estate sales down but prices up That means bid­ding wars have eased but far from disappeared…
3. Toronto Real Estate Gain­ing Momen­tum In April 2009, Greater Toronto Real­tors reported 8,107 sales. While…
4. Toronto real estate strong in tough times The Toronto Real Estate Board (TREB) notched a record 10,955…
5. Toronto Real Estate Sales Higher Than Last Year In May 2009, Greater Toronto Real­tors reported 9,589 sales, up…