No matter how much the media tries to blow up the situation, the numbers are showing that the there is no bubble to burst, just a return to a more balanced market with greater inventory and movement.
There is no doubt that things will slow down in the latter half of 2010 but not the frightening cliff dive that the papers would have you believe, at least not in Toronto.
Again, caution to buyers who are shopping in the frenzy of multiple offers. I have pulled back many of my buyers from over-paying for properties.
We have a saying in our business that “someone just got buried” when we hear of multiples resulting in a price way over value.
Meaning, they won’t be able to sell it for close the amount they paid if the market slows down even a touch and they won’t see the typical gains in equity and value if the market rises. Net, net – they’ll never get out of it…at least for a long time.
Not to mentioned the previously discussed major issue of not having the house appraise out.
The other saying is that “a home is worth what the market is willing to pay”. I disagree.
Just because someone got silly and overpaid does not mean that is what the home is worth. They were just able to take advantage of buyers caught up in the frenzy, or buyers not doing their homework on the home’s actual value.
The value proposition of a home is based on a careful evaluation of comparable properties that have sold in the same area in a recent period of time, i.e. 0-12 months, depending on the market conditions.
Do your home work and be patient – the right home will come 🙂
May 5, 2010 — Greater Toronto REALTORS® reported 10,898 sales through the Multiple Listing Service® (MLS®) in April, representing a 34 per cent increase compared to April 2009. There were also 20,683 new listings in April – a 59 per cent annual increase. Both the sales and new listings results amounted to new records for the month of April under the current Toronto Real Estate Board (TREB) boundaries.
“The GTA resale market is functioning properly. Sales were high as buyers continued to take advantage of affordable home ownership opportunities. Listings grew as home owners reacted to strong sales and price growth,” said Toronto Real Estate Board President Tom Lebour. “More balanced market conditions will result in sustainable rates of annual price growth in the second half of 2010.”
The average price for April transactions was $437,600 – up 13 per cent compared to the average of $385,641 recorded in April 2009.
“Home sales continue to be driven by many different segments of the market, with sales growth for all major home types in both the City of Toronto and surrounding 905 regions,” said Jason Mercer, TREB’s Senior Manager of Market Analysis. “Home sales will remain strong in the second half of 2010, but will slip from the current record pace as borrowing costs rise.”
Click here for the full April Toronto Real Estate Market Watch.