TREB: Listings dwindle, boosting prices

The article below was published this week by the National Post, check out TREBs take on what is happening in the Toronto Real Estate Market.

TREB: Listings dwindle, boosting prices

Greater Toronto Realtors reported interesting results this past April. Deals were completed on 9,041 homes, representing a 17% decline compared to April 2010 when sales spiked to a new record. When April 2011 sales are looked at from a longer-term perspective, we find that the level of transactions was in line with the April average over the previous five years.

Jason Mercer, the Toronto Real Estate Board’s senior manager of market analysis, sheds light on the sales result in relation to his forecast for total GTA resale transactions in 2011: “The level of April sales, after adjusting for the recurring seasonal pattern in transactions, points to approximately 87,000 transactions on an annual basis — more or less in line with our forecast of 85,000 sales in 2011,” Mr. Mercer says.

 It seems things are unfolding as expected in terms of demand for resale housing in the GTA. With this in mind, it is also important to consider where things stand from a pricing perspective.

The average price for April transactions was $477,407 — up 9% from April 2010. This annual rate of growth was quite a bit higher that experienced in the second half of 2010 and the first quarter of this year.

“The number of homes listed for sale has been below expectations so far this year,” Mr. Mercer explains, referring to why the price growth seems to have accelerated. “This means that the share of sales relative to listings has increased — in other words, the market has tightened compared to last year. With more competition between buyers, the rate of average price growth has

“The average existing home selling price is expected to grow by [about] 5% this year. This is the rate of growth we experienced through the first quarter of 2011. Accelerating rates of price growth generally prompt more owners to list their homes for sale,” Mr. Mercer says. “With this in mind, we should see a better supplied market as we move toward the summer, resulting in a return to more moderate rates of price growth.”

I have experienced a number of price cycles. The key to understanding these cycles has always been the relationship between the number of homes offered for sale and the number of people looking to buy. Two things are clear to me in this regard:

First, there are still a lot of people looking to purchase a home in the GTA. The number of sales we have seen through the first four months of this year bears this out.

Second, because of the robust sales numbers and price growth reported recently, households who are currently unsure whether to list their homes or not should become more confident that they will be able to receive offers in line with their asking price within a reasonable amount of time. In April, homes were on the market for an average of 22 days in the GTA and sold for 99% of the asking price.

By Bill Johnston, Toronto Real Estate Board

Bill Johnston is president of the Toronto Real Estate Board, a professional association that represents 30,000 realtors in the Greater Toronto Area.

Jun 27, 2011 – 5:00 AM ET | Last Updated: Jun 24, 2011 3:45 PM ET

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