Yesterday I was having a conversation with some clients who were discussing the impact that the recent financial tsunami might have on the Toronto real estate market. Before the Wall Street crisis, our market had already begun to slow down.
How did we get here? An abnormally low inventory of homes for sale, along with the lowest mortgage rates in years was the main fuel for the last boom in home sales in Toronto. Today the number of homes listed for sale has gone up across the board and mortgage money is becoming tighter as lenders become cautious not to see a repeat of the U.S. experience.
These most recent developments in the financial market can only contribute to a further decline in both the number of homes sold and the average price. Toronto is not a real estate island, immune to the current global financial storms. What happens on Wall Street is bound to affect us here too.
Essentially, we have gone from a sellers’ market to a buyers’ market. Listings have gone up and home sales have declined. In Toronto, the most affected neighbourhoods are mostly in the suburbs. So far, some areas in Central Toronto have been able to buck the trend, with some actually recording average price increases, despite higher home inventories and fewer home sales. A confusing situation, no doubt!
Where do we go from here? From now on we need to keep a close eye on how this financial turmoil will impact our housing market. Homes are not stocks or mutual funds. We invest in them for shelter, security and comfort. No matter what the financial markets do, most of us will keep on investing our hard-earned dollars in home ownership.
However, what we must accept is that it’s no longer business as usual.
This message is especially directed to home sellers. The real estate future looks uncertain for now. If you are seriously motivated to sell, be aware that you have more competition from other sellers. There are fewer buyers and the mortgage institutions are tightening their lending guidelines.
Stay tuned!
Have a question?
Simply send me an email, or call me: Rosalin Smith-Carr, at my direct line (416) 482-8330 ext. 3519
I will be glad to answer all your Toronto housing related questions or concerns.
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