Exerpt from CMHC Housing report for resale homes in Toronto
Existing Home Sales Remain Strong
While the overall economy will register its worst performance since 1991 this year, remarkably sales in the that has seen single-detached homes represent a declining share of resale purchases has stopped in 2009 as improved affordability is allowing households to expand their options in the resale market. There are also economic and demographic forces mentioned in the Local Economy section that favour move-up buyers.
As a result, higher-end locations such as Central Toronto, York Region and Halton Region will experience the greatest rise in demand this year. The trend favouring activity for single detached homes is expected to begin slowing in the second half of next year and reverting back towards multifamily dwellings as affordability erodes.
Balanced Market Conditions
Next Year While sales levels have rebounded this year in the resale market, new listings have moved in the opposite direction. This is a reflection of the strong presence of first-time buyers in the market this year. Aside from the improved affordability conditions, the expansion of the Home Buyer’s Plan and the introduction of the First Time Home Buyers’ Tax Credit have provided added incentives for first-time buyers this year. For existing homeowners, the newly introduced Home Renovation Tax Credit provides an incentive for households to stay put and invest in their existing home. Furthermore, a sense of uncertainty remains amongst sellers who will wait for the market to show signs of stability before putting their home on the market. New listings will decline by 17 per cent this year to 135,000, resulting in a sales-to-new listings ratio just above 60 per cent.
This will categorize 2009 as a seller’s market — characterized by a rise in multiple offer scenarios and shorter days on market averages. More supply is expected to come on the market next year as confidence amongst sellers improves and prices move higher. New listings are forecasted to rise to 150,000 units in 2010, which combined with a lower level of sales next year will result in a sales-to-new-listings ratio of 52 per cent. This will bring the market into balanced territory next year and ease price pressures.
Average Prices Move Higher
Tight market conditions and a compositional shift in sales towards single-detached homes will push up average selling prices by more than three percent this year to $392,540. Current selling prices, however, are already above the 2009 average after strong appreciation in the summer months lifted prices back above $400,000 to their peak level reached at the end of 2007. Price growth will slow as the market returns to a balanced position with the average selling price for 2010 rising about two per cent from its current level to $412,000. In comparison to the average for 2009 as a whole, prices will grow by five per cent next year, which in line with the annual average for the decade.
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