Lately we have been hearing a lot about how the Toronto real estate markets are cooling off. Some would promote the hype that the end has come and that the years of "wow what a great year for real estate" are over. After all we are down over 12.5% in sales to date at the end of May 2008 when compared to the end of May 2007. The number of active listings at the end of May were up over 56% (this statistic although true does not accurately represent the listing activity in the month of may just how many listings were active at the end of may and as such may be misleading without considering the number of new, expired, terminated, suspended and sold listings for the month), fixed mortgage rates are rising, Toronto has an extra land transfer tax, the Canadian dollar, gas prices........
Well lets face it 2007 went beyond most peoples expectations, but how is 2008 doing in a historical perspective. I am not talking about compared to 30 years ago when 20,000 home sales might have seemed great but just compared to the last few years that have been recognized as really good years for the real estate markets. 2004, 2005 and 2006 were by all accounts great years setting records for prices and sales volumes. Never before had the Toronto MLS® registered over 80,000 sales in a single year and here were three consecutive years in excess of 83,000 sales. 2005 saw 35,814 sales by the end of May. At the end of May in 2008 it was 35,309 only 1.4% behind 2005. In may 2006 there were 9,434 homes sold on the Toronto MLS® system compared to the 9,411 in May 2008. Average sales prices are up 4% in may 2008 over May 2007 and our inventory of homes is hovering around 3 months worth.
It is true that the markets are cooling down relative to 2007 93,000 plus sales and homes are likely to take a little longer to sell. However, we are still on the Seller's Market and Balanced Market boarder with a fairly strong demand for homes. Home Buyers in the Toronto area are taking a little more time to make choices and they are getting a little more picky about the home finishes. However, multiple offers are not unheard of and waiting on a home you like is still a good way to miss out on owning it. Even with the Bank of Canada's decision to not cut lending rates and the resulting increase in fixed mortgage rates has not caused the markets to collapse (but that will be another posting).
For buying or selling a home, now is as good a time as ever, well 10 years ago might have been better but we are not likely to see prices at that level anytime in the "foreseeable future" and probably not ever. Prices are still rising and likely to continue, just not with double digit increases.
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