Friday, January 5, 2007

By Tony Wong - Toronto Star

Unseasonably warm weather in December helped Toronto real estate professionals ring in another good year.

The higher than average temperatures and an absence of snow brought out buyers, and the Toronto Real Estate Board recorded 4,447 sales, up 4% over the previous year.

While existing home sales failed to break the overall 2005 record, the surge of activity last month helped 2006 end with 83,084 sales – enough to make it the third-best year ever.

“Milder weather certainly tends to help with housing activity,” Peter Norman, vice-president of Clayton Research, said in an interview. “And it’s really been a great December.”

Norman said the strength of the market is tied to high consumer confidence, relatively low interest rates and good affordability.

This is only the third time annual sales have surpassed the 80,000 mark, according to figures released by the Toronto Real Estate Board.

Last year produced the all-time record of 84,145 sales. This year missed the cut by only 1.2% but also fell short of taking second place, which belongs to the 83,501 sales of 2004.

“There’s still a lot of demand for home ownership out there,” said Jason Mercer, senior market analyst for Canada Mortgage and Housing Corp.

“We’ve reached a plateau, but it’s a plateau at near-record levels.”

Norman said sales may be moderating because of less internal migration to Toronto.

“Toronto used to attract a lot of people from other parts of Canada, and now we’re in a situation where that’s changing. People are leaving Toronto for areas such as Alberta.”

The drop in internal migration is being picked up by immigration from outside Canada. Toronto remains overwhelmingly the first choice of immigrants, but first-time immigrants usually take a few years before they enter the housing market. People who transfer from other provinces are more likely to be ready to buy a home.

Norman says the drop in more expensive single-family homes could be partly attributed to the phenomena.

While sales overall were down from last year in the TREB market area, which includes parts of Greater Toronto, the city of Toronto alone recorded its best year ever, up 1% from 2005, the previous best year – which suggests the trend to move downtown is still strong.

“There is still a lot of interest in central neighbourhoods,” Norman said.

Year over year, the average price of a home rose more moderately than in the past, at 5%, to $351,941.

CMHC forecasts 2007 prices will continue to increase, but closer to the rate of inflation. The federal housing body says the average house will likely only appreciate by 3.7% by the end of the year.

CMHC’s numbers are in line with those of housing analyst Will Dunning, who sees the price of an average resale home up only moderately by the end of 2007, to $358,000.

“A slight slowing of sales combined with a strong growth in listings has caused the market balance to shift away from sellers,” said Dunning in his most recent report.

“Overall though, I consider the resale market to be in very good health.”