Luxury real estate up 20% in October
Tom Lebour, National Post
According to figures released by the Toronto Real Estate Board last week, the housing market started off the fourth quarter with strong results. October transactions through the Multiple Listing Service, at 8,476, were up 64% compared with October 2008. The average selling price for existing homes was up 20% to $423,559.
Jason Mercer, the Toronto Real Estate Board’s senior manager of market analysis, said the reason for the strong annual increase in sales and average price was two-fold:
“Buyers remain confident in their ability to purchase and pay for a home over the long-term, as the average household income in the GTA continues to comfortably cover the mortgage payment on an average-priced home. However, with this said, when comparing this October’s sales and average price to last year’s, it is also important to remember that the housing market was entering a brief period of decline at the end of last year. This fact serves to magnify year-over-year growth that we are currently experiencing.”
What was also interesting about the October results was that the largest sales increases were in the luxury-home price ranges – homes selling above $750,000. In fact, sales of luxury homes were up by more than 200% from last October. Intuitively, this makes sense.
Last winter we were going into a recession. Fewer people were spending on luxury items, including above-average-price homes. Now, with mortgage rates at historically low levels and consumer confidence recovering rapidly, interest in luxury properties has rebounded strongly this year.
October marked the second straight month with double-digit annual rates of average price growth in the Toronto real estate market. Clearly, the GTA housing market has more than recovered from the price declines at the end of 2008 and beginning of 2009. However, it is unlikely we will continue to see annual double-digit rates of average price increase, as we move through 2010.
According to Mr. Mercer, “the strong price increases experienced over the past few months resulted from very tight market conditions in the GTA. Sales were at record levels for the better part of the summer and fall, while listings remained at lows not seen regularly since 2003. With sales high relative to listings, price growth has been above average. In 2010, I am expecting an increase in listings, as home owners react positively to the strong sales and price growth of the second half of 2009. With more listings next year, the average home price will grow at a sustainable rate.”
It has been a tale of two markets in 2009. The steep drop-off in sales at the beginning of the year was cause for concern. Since the summer, however, demand for real estate in Toronto has come roaring back. By all accounts, we will continue to see record levels of sales in November and December before market conditions balance out in 2010.
Tom Lebour is president of the Toronto Real Estate Board, a professional association that represents 28,000 realtors in the Greater Toronto Area.
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