Real Estate Market Update:
In November 2008, we witnessed one of the most dramatic shifts in the GTA real estate market in recent memory. This shift was a result of a number of issues but, most significantly, it was a result of the rapid drop in the price of oil globally, the fall-out from the US Sub market, and the political turmoil that resulted in Stephen Harper proroguing the Canadian parliament.
What ensued was one of the most dramatic shifts from a sellers’ market to a buyers’ market that we have ever seen!
In January 2009, compared to January 2008, we had a number of indicators which would suggest that we were entering into one of the best buyers’ markets we’ve seen in many years. Inventory levels, for example, were up by 30% from January the year before (and the months of inventory on hand more than doubled to 7.9 months of inventory). The average price had dropped by 8% to $343,632. Interest rates were extremely low at a 4.4% for a 5-year fixed rate mortgage. Finally, there was a huge abundance of residential mortgage financing available as a result of everyone’s exodus from the stock market.
In April 2009, we see another fundamental shift in the real estate market in the GTA, as the world is re-awakening to the possibilities of home-ownership. Inventory levels have decreased dramatically and are almost the same as April 2008 with 2.9 months supply on hand. Pricing has increased every month since January 2009 which has resulted in the average price now back at $385,641, down only 3% from April 2009. Interest rates continue to drop as the government tries to stimulate the economy. Today homeowners can obtain a 5-year fixed rate mortgage at an unbelievable rate under 3.8% and mortgage funds continue to be abundant.
If the trends continue most of the inventory and pricing advantages will disappear. Anyone thinking of buying a property should lock in the mortgage rate with their local bank and start the process as soon as possible. For those who are waiting for the bottom market, it appears you may have missed it already. The fundamentals of the GTA real estate market continue to be excellent and the ability to lock in a 5-year rate at under 3.8% should not be missed!