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May 21, 2009
Tony Wong
BUSINESS REPORTER
It may be only halfway through the month of May, but Toronto realtors are seeing the first mid-month rise in activity since the market went into a deep freeze last year.
The Toronto Real Estate Board reported 4,561 transactions in the first two weeks of the month, up 3 per cent compared with May 2008.
The average price, meanwhile, was almost the same as last year’s, down by less than one half of 1 per cent at $399,811.
"More sales and fewer listings resulted in tighter market conditions, which pushed the average selling price back up to last year’s level," said Jason Mercer, TREB’s senior manager of market analysis.
It remains to be seen whether sales will continue on an upward path to finish the month in positive territory. But the spring market has been remarkable in its resilience during the recession.
One big reason is the low interest rates, which have made houses much more affordable.
"Historical lows in mortgage rates are expected over the next two years. This will help to buoy Canada’s housing sector in the short term as the economy goes through a downturn," the Canada Mortgage and Housing Corp. said in a report this week.
The CMHC says it still expects the average price of a home in Ontario to fall by 5 per cent this year and another 3.6 per cent in 2010. In Toronto, the average price of a home is expected to drop to $360,000 by year’s end.
Analysts are watching the housing market closely as auto-assembly plant closings and retail layoffs work their way through the economy. The housing market is typically a lagging indicator, as homeowners will usually try to hold onto their shelter as long as possible before selling during a downturn.
Still, there is reason for realtors’ optimism, as sales have improved dramatically since January’s 47 per cent dive. Last month’s sales were down by 7 per cent year over year.
New-home builders, however, are still struggling. The CMHC said it did not expect housing starts to return to the pace of recent years for at least four years.
"A number of factors will weigh on new-home demand in the short run," the CMHC said. "A slowing economy will dampen labour market conditions and this will temper housing demand for both new and existing homes.
"Secondly, more balanced conditions in the less expensive resale market will create further competition for the new-home market."
While the residential sector is seeing something of a resurgence, the commercial market continues to flounder.
In a separate report yesterday, TREB members reported 466,837 square feet of space leased in April, down from 1.1 million square feet last year. Commercial rents are also 5 per cent lower this year than last.
