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Toronto home prices to keep rising
November 3, 2009
Tony Wong
BUSINESS REPORTER
Toronto housing prices will continue to rise next year by as much as 5 per cent, according to a forecast by the Canada Mortgage and Housing Corporation.
Although price growth will slow, buyers looking for relief from the tight markets of 2009 will face another year of rising home values. The forecast said the average price of an existing home at the end of 2010 will be $412,000, compared with $392,540 by the end of this year.
The 5 per cent growth forecast is in line with the average annual increase for the decade.
The growth, the federal housing corporation said, will be fuelled by the sales of more single-detached housing. For the first time since 2006, low-rise homes will account for the majority of sales in the GTA this year and next, according to the forecast.
"With low interest rates people are buying more house or going to nicer neighbourhoods, which is helping average prices move upward," said Shaun Hildebrand, senior market analyst at the CMHC.
Even though prices and listings will move higher, sales for 2010 are actually expected to be down by 4.9 per cent as the market cools.
Sales this year are expected to surpass 2008 figures by 7.3 per cent.
"As the stimulative increases in demand becomes satisfied and market conditions begin to reflect underlying economic fundamentals, sales will slow in 2010," says Hildebrand.
"Affordability will moderate slightly next year, but will remain in check due to slow price growth and incremental interest rate increases."
This year the market has been characterized by a lack of listings, down by 17 per cent overall for the year compared with 2008, which has placed upward pressure on prices.
"A sense of uncertainty remains amongst sellers who will wait for the market to show signs of stability before putting their home on the market," the forecast said.
That should change next year when listings are forecast to go higher by 11 per cent as move-up buyers gain confidence in an economic recovery.
"This will bring the market into balanced territory next year," says Hildebrand.
While sales of single-detached homes have done well, the popular condo market seems to have fallen out of favour, at least in the short term.
A tougher selling environment for high-rise homes is expected to see a sales decline of 23 per cent this year, the lowest level since 2003.
"Construction delays and a heightened sense of uncertainty regarding new condominium projects this year has turned buyers away from pre-construction projects," says the CMHC.
"At the same time, less project launches have created fewer new options for buyers."
Improving youth employment and a shift toward lower-cost housing should see high-rise sales increase by 17 per cent by the end of 2010, according to the CMHC forecast.
The forecast also said weak employment within the key 25-44 age group of first-time home buyers will have an impact on the overall demand for Toronto home purchases next year.
However, continuing low mortgage rates should help keep the market going.
Posted rates should gradually increase in 2010 with a one-year rate expected to be in the 3.5 to 4.25 per cent range. A five-year mortgage rate should be in the 4.5 to 6 per cent range.
http://www.yourhome.ca/homes/realestate/article/720111--toronto-home-prices-to-keep-rising
November 3, 2009
Tony Wong
BUSINESS REPORTER
Toronto housing prices will continue to rise next year by as much as 5 per cent, according to a forecast by the Canada Mortgage and Housing Corporation.
Although price growth will slow, buyers looking for relief from the tight markets of 2009 will face another year of rising home values. The forecast said the average price of an existing home at the end of 2010 will be $412,000, compared with $392,540 by the end of this year.
The 5 per cent growth forecast is in line with the average annual increase for the decade.
The growth, the federal housing corporation said, will be fuelled by the sales of more single-detached housing. For the first time since 2006, low-rise homes will account for the majority of sales in the GTA this year and next, according to the forecast.
"With low interest rates people are buying more house or going to nicer neighbourhoods, which is helping average prices move upward," said Shaun Hildebrand, senior market analyst at the CMHC.
Even though prices and listings will move higher, sales for 2010 are actually expected to be down by 4.9 per cent as the market cools.
Sales this year are expected to surpass 2008 figures by 7.3 per cent.
"As the stimulative increases in demand becomes satisfied and market conditions begin to reflect underlying economic fundamentals, sales will slow in 2010," says Hildebrand.
"Affordability will moderate slightly next year, but will remain in check due to slow price growth and incremental interest rate increases."
This year the market has been characterized by a lack of listings, down by 17 per cent overall for the year compared with 2008, which has placed upward pressure on prices.
"A sense of uncertainty remains amongst sellers who will wait for the market to show signs of stability before putting their home on the market," the forecast said.
That should change next year when listings are forecast to go higher by 11 per cent as move-up buyers gain confidence in an economic recovery.
"This will bring the market into balanced territory next year," says Hildebrand.
While sales of single-detached homes have done well, the popular condo market seems to have fallen out of favour, at least in the short term.
A tougher selling environment for high-rise homes is expected to see a sales decline of 23 per cent this year, the lowest level since 2003.
"Construction delays and a heightened sense of uncertainty regarding new condominium projects this year has turned buyers away from pre-construction projects," says the CMHC.
"At the same time, less project launches have created fewer new options for buyers."
Improving youth employment and a shift toward lower-cost housing should see high-rise sales increase by 17 per cent by the end of 2010, according to the CMHC forecast.
The forecast also said weak employment within the key 25-44 age group of first-time home buyers will have an impact on the overall demand for Toronto home purchases next year.
However, continuing low mortgage rates should help keep the market going.
Posted rates should gradually increase in 2010 with a one-year rate expected to be in the 3.5 to 4.25 per cent range. A five-year mortgage rate should be in the 4.5 to 6 per cent range.
http://www.yourhome.ca/homes/realestate/article/720111--toronto-home-prices-to-keep-rising
