Resale strength to hold in 2010

The Greater Toronto Area (GTA) resale market was marked by strong year-over-year sales and price growth in January. There were 4,986 sales in the Toronto Real Estate Board (TREB) market area last month, compared with 2,670 in January 2009, when resale market activity dropped off due to the economic downturn. Over the same period, active listings were down 41%. With sales increasing relative to the supply of homes for sale over the past year, we continued to see strong upward pressure on the average selling price. The average price for last month's transactions was $409,058, representing a 19% annual increase.

I asked Jason Mercer, TREB's senior manager of market analysis, if he expects to see similar annual sales increases throughout 2010.

Mr. Mercer feels that "sales in 2010 will be in line with 2009 levels, but this increase will be driven by activity in the first half of the year. With a strong hand-off from 2009, sales in the first half of 2010 will be brisk, including a record number of resale transactions in the first quarter. In the second half of 2010, however, we will see a bit of moderation, with lower sales compared with the record third and fourth quarter sales experienced last year. The cost of home ownership will start to rise, with mortgage rates increasing, the average home price continuing to trend upward and the average household income growing at a below-average clip.

One of the big real estate stories in Toronto, and indeed across the country, over the last year has been listings, or lack thereof. It is Jason Mercer's feeling that the pool of homes available for sale will expand as we move through 2010.

"Strong sales and price growth will prompt a growing number of homeowners to list their homes for sale in 2010. Generally speaking, the listings trend follows that of sales and price, but with a lag. Given that we have seen strong sales and price growth for more than half a year, it makes sense that listings will recover this year. With more choice in the existing home market, expect the rate of price growth to continue, but at a more moderate pace in the second half of this year."

It looks like 2010 will be another good year for the residential real estate market in the GTA. The quick recovery of existing home sales and average price was due in large part to improving consumer confidence in economic recovery. It looks as if this confidence was well founded. All signs are pointing toward the fact that the economy continued to grow in the fourth quarter of 2009. In the GTA, we experienced the sixth straight month of job growth in January. Sustained labour market recovery in the GTA along with renewed growth in all sectors of the economy over the next year will be important to the health of the region's housing market.

(prepared by Tom Lebour/National Post)