Home sales shoot up as buyers jostle in sparse spring market!
Toronto Star - Tony Wong
Business Reporter
Jim Common knew it was going to be a good spring market when he saw the line of parked buyers waiting to present an offer on his client's Richmond Hill home.
"The police came by and asked why there were so many cars blocking the street," the Remax agent said. "I've never seen anything like it."
The chronic shortage of listings meant the property he listed for $649,000 sold for $751,800, more than $100,000 over asking. It also had 26 offers, which explains why neighbours weren't happy with Common.
"Never in my wildest dreams did I expect that many offers, especially since this is Richmond Hill, not Toronto," said Common. "But there just isn't anything out there for buyers."
Record-breaking warm temperatures probably didn't hurt either.
The Toronto Real Estate Board reported Wednesday that 4,353 existing homes traded hands during the first two weeks of March, up 70 per cent from the same time last year, when the market was in recession.
"Very strong demand continues to dominate, lifting sales of existing homes to all-time highs ... yet keen buyer interest has largely failed to attract more sellers, resulting in a dearth of homes available for sale," said Royal Bank of Canada senior economist Robert Hogue.
Sales were also strong enough to break the mid-month peak set in March of 2006 by 16 per cent, according to the board. The average price for mid-month transactions was $440,153, up 20 per cent over last year.
Some good news for buyers: New listings increased by 34 per cent over last year.
"Look for double-digit price increases to cease later in 2010, as new listings rebound from the low levels experienced in 2009," said Jason Mercer, TREB's senior manager of market analysis. "Increased listings will give buyers more choice, resulting in less upward pressure on home prices."
Higher sales prices in the fourth quarter of 2009 also eroded affordability for Canadians.
"Red-hot home resale activity and strong prices across Canada made it more difficult to own a home for a typical household," the Royal Bank said in a report.
Strong sales in cities such as Toronto have hurt affordability.
"The resulting price increases have caused affordability to slip ... suggesting that stress is starting to build in the Toronto market," said RBC's Hogue.
It now takes 58.4 per cent of pre-tax income to service a mortgage on a two-storey house, compared with long-term averages of 53.7 per cent, according to the bank.
Affordability is expected to drop further with the expected rise in interest rates later this year, the bank said.
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