This summer may not be breaking records for hours of sunshine but home buyers in Toronto have not been put off by the wet weather.
This week the Toronto Real Estate Board said Greater Toronto realtors reported a record 9,967 sales in July. This is a hefty 28% rise over the same month in 2008. Sale prices were also up. In July, the average price of a transaction was $395,414, a 6% climb compared with July 2008.
“Households confident in their positioning within the current economic environment have taken advantage of housing affordability in the GTA,” notes new TREB president Tom Lebour in a release. “The real estate sector has been one of the sectors making a positive contribution to economic growth in the GTA, not to mention Ontario and Canada more broadly.”
While the July figures are positive, the year-to-date numbers have yet to catch up. Sales for the first seven months of this year were at 50,632 — that is a 1.2% drop on the same period in 2008. However, the average price for this period is down less than 0.5% at $385,808.
“The steep drop-off in sales experienced at the beginning of the year has all but dissipated,” notes Jason Mercer, TREB’s senior manager of market analysis, in a release. “With five months left to go in the year, it is probable that total existing home sales in 2009 will be at or above last year’s level.”
Looking ahead, there were signs of confidence in the building trade as, against analysts’ expectations, Canadian building permits rose 1% in June from a month earlier. Statistics Canada also revised the data for May to a 17.5% month-on-month gain, up from the already spectacular 14.8% rise previously posted.
The value of building permits in Toronto rose 1.2% in June from a month earlier.
“On balance, the continued strength of the building permit data bodes well for the Canadian construction market,” notes Charmaine Buskas, senior economics strategist, TD Securities. “It is clear that domestic considerations will remain a key driver for the economy, as the external sector remains under pressure.”
According to StatsCan, residential building permits rose 0.5% month-on-month in June. The traditionally more stable single-family permit component rose 2.6% in June from a month earlier, while the usually more volatile multi-family dwelling element was down 4.1%.
The agency noted that the increase in building permits for single-family dwellings compensated in dollar terms at least for the decline in permits for multi-family dwellings.
In the United States, the pending homes sales index for June climbed 3.6%, the fifth consecutive monthly rise, according to the National Association of Realtors. The last time this forward-looking indicator hit a five-month string of gains was in July 2003. In addition, the gains in existing house sales were spread across the country and not just concentrated in specific regions.
“Historically low mortgage interest rates, affordable home prices and large selection are encouraging buyers who’ve been on the sidelines,” notes Lawrence Yun, NAR chief economist in a release. “Activity has been consistently much stronger for lower-priced homes.”
This index gives an indication of the number of contracts that are being signed for resale homes.
“Housing prices look to have stabilized, but we need to see a couple of more months of data before we can slam the door on that one,” notes Jennifer Lee, economist, manager at BMO Capital Markets, Economic Research. “If the government’s home modification program would speed up a little, we would see a faster improvement. Data released [Thursday] show that only 9% of eligible homeowners have had their mortgages modified.”
If all goes to plan, the majority of these pending contracts will become actual sales within a couple of months.
“At the risk of being accused of being too optimistic, the bottoming process for the housing market has formed,” notes Ms. Lee.