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GTA holds on to strong resale market

Dorothy Mason President, Toronto Real Estate Board, National Post

 

Canadian consumers and analysts are keeping a watchful eye on our markets as reports of U.S. housing market slowdowns make news headlines. While the national economies of the United States and Canada are deeply intertwined, real estate markets are very locally driven.

In fact, despite the possibility of a U.S. downturn, for a number of reasons there has never been a better time to be in the greater Toronto area housing market. Not only are the housing market and the economy in good shape here, consumers have access to more information than ever before and Realtors have more tools at their disposal to provide the service consumers want.

The most important thing to know about the greater Toronto area market is that it is not in a "bubble." A bubble is characterized by rapid increases in housing values that are not supported by income levels or other economic indicators. For example, Phoenix, Ariz., saw prices rise more than 30% in 2004 and 2005. Several other markets share similar traits, and some have recently shown signs of price deceleration associated with the bursting of a real estate bubble. Housing bubbles, though, are the product of local conditions and don't spread across borders. The greater Toronto area, by comparison, has been remarkably stable in the past decade. Since 1996, many records for sales volume have been set, but the average price of a home has consistently increased an average of about 6% to 7% annually. This is not bubble territory.

Our market is also supported by strong economic conditions. Toronto's economy is very diverse, unemployment is at healthy levels, the stock market is very strong and despite some minor increases, interest rates are still very low by historical standards. Affordability is also in check, most recently assisted by a slight easing of high energy prices. According to the Royal Bank's Housing Affordability Survey, a two-storey Toronto home, including mortgage, taxes and utilities, takes an average of about 47% of a homeowner's pre-tax income. In Vancouver, that figure is nearly 70%. Fifteen years ago, Toronto was over 70%.

Another important factor is the 90,000 immigrants who make the greater Toronto area their home every year. Just as the economic activity generated by these people helps bolster the overall Toronto economy, the fact that many of them will become first-time buyers within a few years of arriving boosts housing demand and helps shield the local real estate market from negative forces like a U.S. housing downturn.

With confidence in the market, consumers are pushing ahead and arming themselves with as much information as possible. Technology has helped make the buying and selling process easier and more efficient, and consumers are increasingly turning to the Internet for information. A new service available on The Toronto Real Estate Board's public Web site, torontorealestateboard.com, for example, allows consumers access to a database of open houses taking place across greater Toronto. The site also provides up-to-date market statistics and reports, as well as current listings and important tips.

Technology has also given Realtors new and powerful tools to use on behalf of their clients. As a result of a recent agreement between TREB, Teranet and Realnet, information about new housing developments under construction or recently completed is now available to Realtors to supplement their expertise about the resale market. The co-operative Multiple Listing Service used by Realtors gives unprecedented exposure to listed properties, making it easier to find the right home or the right buyer. The Buyer Registry Service launched earlier this year provides another property matching tool that also has the benefit of reducing the likelihood of duplicate agreements. All these tools help make for a better home-buying or -selling experience for consumers.

In dealing with an important decision like buying or selling a home, it is crucial to have as much information as possible in order to make the right financial and lifestyle decision for you and your family. This includes having the best available tools working on your behalf in the marketplace. It also means having a good grasp of local market conditions and understanding that the Greater Toronto Area has a healthy housing market built upon a strong economic foundation with demand that is based on real need.

Posted on Saturday, September 30, 2006 at 05:51PM by Registered CommenterElaine in | CommentsPost a Comment

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