Boom or Catch Up?

You may have noticed reports all over the news that real estate is back.

Home buyers who didn't take advantage of the downturn are now facing bidding wars and over-asking purchase prices. As they say, by the time you realize the market has hit bottom, it's already over.

As of the end of September, the average price in the GTA is up to $406,877, an increase of 10% compared to the same time last year. Sales activity is up 28%.

Mortgage rates continue to be historically low and inventory is increasing, but is this just a catch up from pent up demand of buyers waiting it out and sellers not wanting to list until they felt things were picking up again? Or is this just a historical seasonal peak in the year?

TREB believes this market is a sign of growth and recovery. Growing consumer confidence and financial stability, low interest rates and positive economic news are driving long term investments. They also say indicators such as growth in all categories of the market show widespread movement upward, as opposed to a trend in one particular sector.

As long as inventory keeps up with demand and interest rates stay low, as they are said to be until mid 2010, I believe we will see a steady pace right through to next summer.

But it is a funny market right now. Although there is heated competition in some price points such as the $500,000-$800,000 range, buyers are not willing to be aggressive on anything that is overpriced.

Some sellers are happy to put their home up for sale over market value just on the chance that they get that perfect bite but are driving away the potential for competitive bids by not pricing their home attractively. Buyers are shopping but are very discriminating and taking a much harder look at values, still looking to get a deal where possible.

It's kind of like a car race after an accident...people are getting back out there and going full throttle but with a cautionary foot ready to hit the brake at any sign of danger.

For more information, check out these great links and recent articles:

Check out varying opinions on the real estate market...

GLOBE AND MAIL - BACK TO BOOM

Click on this interactive map to see what is happening to values in your neighbourhood...

TORONTO HOME VALUE SURVEY

Click here for the full Toronto Real Estate Board September Market Watch...

TREB Market Watch


Cheers,
Mark
416.728.2499
mark@markrichards.ca