Friday, July 18, 2008

T.O. home prices rise with gas costs

While some doomsayers warn of a real estate crash, a Royal LePage housing report released yesterday is far more optimistic. It points to a soft landing with house prices in Canada gaining another 3.5% this year, even though sales will be off by 11.5%. Only in hot-beds like Calgary and Edmonton will prices depreciate and come back down to earth.

In Toronto, high gas prices are actually giving the market a boost with "an influx of purchasers relocating to the city's core, placing properties near public transit at a premium," Royal LePage said.

Perhaps that explains an explosive 36.4% year-over-year hike in the value of waterfront condos in Toronto, with prices averaging $450,000 in the second quarter of this year.

Royal LePage predicts average Toronto home prices will rise by 3% to $388,500 by the end of this year, while sales slump by 13.8%.

"While the market is less frantic than last year -- the most active year on record by far, it's important to keep in mind that Toronto's market is performing well, and that 2008 will also end up being one of the strongest years we've seen," said Gino Romanese, Royal LePage senior vice-president.

Yesterday, the Toronto Real Estate Board's mid-month report again reported slumping sales, while home price gains slow. But while Royal LePage said high gas prices were bringing more buyers into the city, the TREB report showed the opposite.

Following a trend since Mayor David Miller introduced his municipal land transfer tax on Feb. 1, City of Toronto sales were down another 17% with 1,369 homes changing hands, while average prices gained 1% to $419,199.

Sales were also down in the 905 region, but by only 8%, with 2,128 sales. They were also up 7% from 1,987 sales a year ago. Average prices in the 905 were up 2% to $345,741.

When I read all these conflicting facts, sometimes it just makes my head spin. The only Values for real estate that can be accurately projected are historic. I routinely find questions on forums asking if its the right time to buy. Now I am seeing people trying to avoid closing on purchases often with dramatic results. Stay tuned for that tale of woes.
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