What Can We Expect From The The Toronto Real Estate Market As We Enter 2010?

By on January 1, 2010 in Condos/Lofts, Houses with 0 Comments

What Can We Expect From The The Toronto Real Estate Market As We Enter 2010? Photo

     Needless to say, 2009 was an interesting year for the Toronto Real Estate Market.  Back in January we were in the depths of a major downturn that had been in effect since Fall 2008.  By late Spring/early Summer however, we were in a seller’s market and prices were on the rise.

Two of the biggest factors contributing to this turnaround are the record-low interest rates we’ve enjoyed and a low inventory of properties for sale.  I think it’s safe to say that both of these will continue to play a significant role in the market as we enter 2010.

Interest Rates:  This historically low cost-of-borrowing has motivated many buyers to enter the market, creating a greater demand for homes.  This demand should remain strong and will likely grow as we near June/July, which is when the Bank of Canada will raise the overnight rate resulting in a corresponding rise in mortgage rates.  No doubt there’ll be many buyers motivated to purchase while they can still take advantage of the incredibly low rates. 

InventoryThe law of supply and demand is always at play in any real estate market.  In the Toronto market of the past 7-8 months, the increased demand for homes has not been met with an increased supply of homes.  This has resulted in multiple-offer scenarios, a steady increase in prices, and many frustrated buyers.  However, we may see more inventory hit the market in the coming months as Sellers respond to the message we’ve been spreading since the summer, “Now is a great time to sell!”

HSTThe arrival of the Harmonized Sales Tax in July will have an effect as well.  Many buyers will be motivated to purchase before the new tax comes into play so as to avoid having to pay more for lawyer fees, home inspections, etc.  Sellers will also want to avoid paying the higher tax on realtor fees, lawyer fees, etc.

Although no one has a crystal ball to predict exactly how things will play out, it’s reasonable to expect the market to cool a bit in the second half of 2010, due primarily to the increase in interest rates.  And there are of course other factors that could have an effect on the market as well (the state of the U.S. economy, the stock market, etc…) and no one can predict exactly how these things will play out either. 

I generally advise my buyer clients that the best strategy is to purchase for long term (5 years or more) in order to realize a sufficient value increase in the property.  Buyers also need to remember that although the interest rates are attractively low right now, they need to be prepared for an increase in their monthly cost-to-carry when the time comes to renew their mortgage at a higher interest rate.

If you’re thinking of making a move and would like to know how I can help, feel free to contact me for more info.

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