Over the past several months, the GTA real estate market has been a pretty positive environment for sellers. Prices have risen, days on market have dropped and buyers have wanted what sellers had.
But in the last four months, sales have been dropping even as prices continue to rise. According to the Toronto Real Estate Board, August home sales dropped by 22% to 6,232 in August 2010, compared with 8,035 sales in August 2009. At the same time, the average price of a home in the GTA increased 6% to $411,012. There’s a good reason why. According to TREB, market conditions have stayed tight enough to support higher home prices, and under current mortgage lending standards, a household earning the average income in the GTA can comfortably afford the mortgage payments on an average-price home.
Not so in other Canadian cities. According to the Royal Bank of Canada’s affordability measure, fewer Canadian households are finding housing affordable. Given the bad news nationally, can the GTA remain isolated from the pain? Says TREB: “Market conditions and the affordability picture would have to change dramatically before a sustained drop in the average selling price would take place.”
Nevertheless, sellers would be well advised to consider listing sooner rather than later, with interest rates recently rising. Whether or not this is the “dramatic” change noted by TREB, it’s almost certain to impact some potential homebuyers in the GTA.
