HAVE HOUSE PRICES IN THE GTA PEAKED?
Even though unit sales in the GTA declined 6.8% from August to September, and 20.8% from last September's unit sales, the average price rose 5.2% in the month to $504k. This brings us within 2.4% of the $516k reached this past April. In other words, prices in the GTA are still strong and they even have some upward potential.
The significant decline in unit sales would appear to be a reaction to the news stories about an over-supply of condos being built in Toronto. Many buyers are waiting to see if prices of condos will drop. A large portion of this market is investment buyers looking to service the rental market. Their urgency to purchase isn't as strong as the non-condo market which is driven by changes in family sizes, career changes and lifestyle changes. Nevertheless, the total unit sales in 2012 will still exceed 80,000 units, which is still a lot of buyers.
Looking ahead, the GTA Fall, Winter and Spring markets aren't likley to dry up. I've noticed a lot of new listings in October and sales appear to be ahead of September's levels. Also, homeowners who priced too high above local market values are lowering their List prices. Nevertheless, the growing population of the GTA will assure an on-going strong demand for GTA housing.
My big concern is the affect negative statements by the IMF concerning Canadian housing prices will have on our media, politicians, bankers and monetary authorities. Frankly, I don't buy into the IMF's logic or analyses of our market. The Canadian market is totally different from the countries they are comparing us to. I'm not so certain that our domestic policy makers are able to understand and recognize the flaws in the IMF's position.
Last week a relative from a London England neighbourhood came to visit. Her tiny two bedroom flat with freehold title is worth more than twice an equivalent property would cost in Toronto's downtown. I honestly can't accept that it is worth paying twice as much for the priviledge of living in London England! This is another reason why I think the IMF is way out of line in saying our market needs a price reduction.
The fact that any price reduction would directly reduce the equity near-seniors and seniors have in their Canadian homes should be a primary concern of our leaders. The IMF needs to either correct their assessment, or Canada needs to just drop out of this bankrupt Euro-led monetary propaganda organization.
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