Coming off a record 2009, the Toronto Real Estate Market for all intents and purposes is poised for a very healthy spring and early summer market. The momentum of the past six months coupled with the low listing inventory has fuelled buyers thirst for quality properties. Even in this hot market, overpriced properties will stagnate while well priced quality properties are finding willing buyers and even multiple offer scenarios.
The threat of rising interest rates later in the year is propelling many buyers to act now rather than wait out the market. The Bank of Canada’s commitment to hold the current policy rate until the second quarter of 2010 effectively serves as a catalyst for many prospective buyers. The subsequent caveat being that the Bank of Canada rate freeze is purely conditional and is subject to change should the economy take an unexpected path.
Historically, the annual real estate market has had two dramatic bell-type curve components – one in the spring and one in the fall. The summer and winter months, generally fall in the lower areas on the bell curves. The winter of 2009 wrote a different page in the history books of the Toronto real estate market, as the market did not slowdown. Multiple offers continue to be prevalent, even during the holiday period and subsequently continued into the early weeks of January 2010.
As we enter January in the Central Toronto market, inventory levels are still quite low; buyers are abundant; there is an ominous Harmonization Sales Tax looming over Ontario in July; and the Renovation Tax Credit is concluding in the weeks ahead. Some speculate that many sellers have been holding off bringing their properties on the market in order to take advantage of the Renovation Tax credit. With consumer confidence building in the economy, we should see resale listing inventory levels start to rise in the coming weeks. The pent-up demand of unsatisfied buyers and the increased inventory should move us towards a more balanced market in the first few months of 2010.
As we experienced with the poorly thought out Toronto Land Transfer Tax, there will be an increased impetus from buyers to purchase before the HST deadline along with some sellers wanting to avoid the increased tax hit. Post implementation of the HST, we anticipate a cooling down period for a few months as buyers, sellers and real estate professionals rest up before the start of the fall market in September.
The fall market should see a return to more balanced market where supply more closely matches demand, with the only caveat being that if rates do remain low then buyers may deplete the available supply. The prognosis overall is that the Toronto real estate market is excellent, given the net influx of migrates; the entry of many first time buyers; and the relocating baby boomers. Toronto’s world class stature will continue to be a haven for people looking to live and work in a safe, vibrant, world class environment and ensure the longevity of a healthy central Toronto real estate market well into 2011.