JasonParis
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Toronto's real estate market shows signs of cooling down
Posted: February 05, 2008, 7:44 PM by Barry Hertz
Real estate
By Chris Wattie, National Post
Toronto’s superheated real estate market is showing signs of cooling down with the imposition of the city’s land-transfer tax, recording a sharp drop in prices last month after setting multiple records last year, according to figures released yesterday.
The average price for a Toronto resale home fell nearly $20,000 in January, the Toronto Real Estate Board numbers showed, a potentially worrisome portent for 2008.
Maureen O’Neill, the president of the real estate board, said the drop in the average price of a resale home, from $394,931 in December to $373,449 in January, was the first month-to-month drop in at least seven years. “That’s quite unusual,” she said. “It’s the first time the average price has gone down since 2001, which is as far back as we checked.”
The average price is 6% higher than January, 2007, but lower than the December average price.
Ms. O’Neill said the price slump could be the beginning of a trend, as the city’s new land-transfer tax took effect on Feb. 1. The tax, approved last October by city council will amount to nearly $4,000 on an average-priced home in Toronto. Ms. O’Neill said it could drive prices down by encouraging more buyers to look outside the city limits, or by tightening how much they can afford to pay.
“Will the additional tax stop people from buying homes? No, of course not,” she said. “But it’s going to be a burden ... and people may say: ‘You know Toronto’s getting too pricey,’ and they’ll look elsewhere in the GTA.”
Micah Munro, an agent with Bosley Real Estate, said the tax appears to be having a psychological effect on many of the buyers he is showing around the east-end neighbourhoods where he concentrates. “There’s been a ton of buyers trying to get in before the tax kicked in,” he said. “They were all asking me about the tax .... I was even hearing it from first-time buyers, who are exempt from paying it.”
“It was a mad rush last month.”
Ms. O’Neill said sales were still strong across the city last month, although they did not reach the soaring numbers of January, 2007, which set a record with 5,173 sales. Last month, a total of 5,073 properties changed hands, within 2% of the record, she said.
“There’s all sorts of indications that the economy in Toronto will remain strong this year,” she said. “All the signs are there.”
The real estate board figures showed strong sales in Toronto’s downtown and east end, led by the Danforth’s 30% increase in transactions over last January and by West Agincourt, with 32% more homes sold, mainly a surge in condominium apartment sales.
Condominiums also led the way in the downtown core and in Willowdale, both of which saw a 19% overall increase.
But Ms. O’Neill said realtors will be keeping a particularly sharp eye on prices now that the new tax is in effect. “I’m going to be watching those figures this month and next very, very closely.”
Mr. Munro said it is still too early to tell what effect the municipal tax is having on the market. “I haven’t seen any effect yet,” he said. “But it hasn’t even been a week yet .... It’s still hard to tell.”
Photo by Nathan Denette for National Post
Posted: February 05, 2008, 7:44 PM by Barry Hertz
Real estate
By Chris Wattie, National Post
Toronto’s superheated real estate market is showing signs of cooling down with the imposition of the city’s land-transfer tax, recording a sharp drop in prices last month after setting multiple records last year, according to figures released yesterday.
The average price for a Toronto resale home fell nearly $20,000 in January, the Toronto Real Estate Board numbers showed, a potentially worrisome portent for 2008.
Maureen O’Neill, the president of the real estate board, said the drop in the average price of a resale home, from $394,931 in December to $373,449 in January, was the first month-to-month drop in at least seven years. “That’s quite unusual,” she said. “It’s the first time the average price has gone down since 2001, which is as far back as we checked.”
The average price is 6% higher than January, 2007, but lower than the December average price.
Ms. O’Neill said the price slump could be the beginning of a trend, as the city’s new land-transfer tax took effect on Feb. 1. The tax, approved last October by city council will amount to nearly $4,000 on an average-priced home in Toronto. Ms. O’Neill said it could drive prices down by encouraging more buyers to look outside the city limits, or by tightening how much they can afford to pay.
“Will the additional tax stop people from buying homes? No, of course not,” she said. “But it’s going to be a burden ... and people may say: ‘You know Toronto’s getting too pricey,’ and they’ll look elsewhere in the GTA.”
Micah Munro, an agent with Bosley Real Estate, said the tax appears to be having a psychological effect on many of the buyers he is showing around the east-end neighbourhoods where he concentrates. “There’s been a ton of buyers trying to get in before the tax kicked in,” he said. “They were all asking me about the tax .... I was even hearing it from first-time buyers, who are exempt from paying it.”
“It was a mad rush last month.”
Ms. O’Neill said sales were still strong across the city last month, although they did not reach the soaring numbers of January, 2007, which set a record with 5,173 sales. Last month, a total of 5,073 properties changed hands, within 2% of the record, she said.
“There’s all sorts of indications that the economy in Toronto will remain strong this year,” she said. “All the signs are there.”
The real estate board figures showed strong sales in Toronto’s downtown and east end, led by the Danforth’s 30% increase in transactions over last January and by West Agincourt, with 32% more homes sold, mainly a surge in condominium apartment sales.
Condominiums also led the way in the downtown core and in Willowdale, both of which saw a 19% overall increase.
But Ms. O’Neill said realtors will be keeping a particularly sharp eye on prices now that the new tax is in effect. “I’m going to be watching those figures this month and next very, very closely.”
Mr. Munro said it is still too early to tell what effect the municipal tax is having on the market. “I haven’t seen any effect yet,” he said. “But it hasn’t even been a week yet .... It’s still hard to tell.”
Photo by Nathan Denette for National Post
Got my eyes on a house on Wells@Brunswick.
