There’s been no shortage of articles in the past several months warning about problems in the market for buyers and sellers, most notably this post in the Globe and Mail entitled, Why 2013 might be a bad year to buy a Toronto condo.
With sales of new units falling 53 per cent in December compared to last year there is concern about whether trends that have supported this market in the past will re-assert themselves in 2013.
Along with rising inventories in condo projects currently under construction you can start to understand why purchasers are considering holding off and sellers are starting to think about listing early in the year rather than wait it out. Some agents are reporting that January was one of their best months ever for listings. Patrick Rocca reported that while properties in the $2M plus range are not moving quickly, those in the 600k – 1M range are still selling, some with multiple offers. He also notes that the weather this January was milder than normal, but Mr. Rocca says there is also some pent-up demand. People haven’t been waiting for February when the spring market typically takes off which could explain some of the activity that the Toronto Real Estate Board has seen in their most recent report.
In their January 2013 Report they note a positive shift in the market, perhaps giving signals that the market is bouncing back. Greater Toronto Area Realtors reported 4,375 transactions through the TorontoMLS system in January 2013. This number represented a slight decline compared to 4,432 transactions reported in January 2012.
If we look at the 416 area, sales among detached, semi-detached, townhouses and condos were all down, although prices still increased over the same period last year. What’s also interesting is that properties tend to be staying on the market a bit longer than what Toronto buyers have been seeing in the past. Its interesting to note that in TREB video commentary they report that the year over year sales decline is smaller than what they’ve seen for most of 2012. They also note that stricter mortgage qualification rules put in place in July have caused some buyers to take a pause for the balance of 2012 and they might now be coming back into the market in 2013.
With this in mind TREB is predicting continued price growth thin the GTA market (not at levels seen in 2012) but at a more moderate 3-4% year over year growth.
One of the things we recommend when assessing our clients objectives is whether the home they want to create is better achieved through renovating their current property or going into the market. With concerns among about the market, it may be worthwhile looking at what could be done to your existing home to create spaces you love and not worry about the ups and downs of the market.
But back to the condo market- with the coming increase in supply and reduction in sales it looks like that market may have a way to go before it finds itself on an upward trend as we’ve seen in the past.