Residential real estate activity in the Greater Toronto Area (GTA) shifted into high gear in January. Housing sales have returned to pre-recession figures, with the 4,986 homes sold in January – off peak 2007 levels by less than 200 sales.

Average price appreciation continues unabated, up 19 per cent over one year ago, bringing values to $409,058.

Concerns over diminished inventory (active listings are down 41 per cent from January 2009 at 12,052 units and new listings have dropped three per cent) are creating even greater urgency in the market. Active listings in January 2010 were at the lowest level on record for the month in more than a decade. The threat of higher interest rates, the looming Harmonized Sales Tax (HST), and rising housing values have all served to bolster activity. Momentum from the latter half of 2009 has spilled over into the New Year and shows no signs of letting up.

First-time buyers are a major force in the market, as they vie for properties priced between $200,000 and $400,000. More than half of sales in the GTA occurred in that price bracket.

Multiple offers are once again part of the landscape, with competing bids on entry-level homes now a common occurrence. It’s estimated that there are as many as 10 buyers for each individual property. Hot pockets continue to fare well, but the peripheral areas – as well as Toronto’s bedroom communities – are experiencing tremendous activity.

The greater ‘bang for the buck’ and the lower land transfer tax in the suburbs is attracting purchasers from Metropolitan Toronto. Condominium sales have also soared in recent months, as first-time buyers focus their attention on location, location, location.

Prime developments located in trendy neighbourhoods like Yonge and Eglinton are experiencing heated demand, with high-rise apartments moving in multiple offers almost daily. Units priced at the magic number (in and around $250,000 to $350,000) are virtually impossible to stock. Affordability is a key component in multiunit residential and as long as units are coming onstream, condominiums will represent the first step of homeownership for many. Upscale condominium sales are also brisk, with eight units moving over the $1 million price point in January alone.

Baby boomers may be downsizing in square footage, but many of these moves are lateral in nature. Luxury homes sales were back with a vengeance in January with 50 sales posted over the $1.5 million price point alone. Lawrence Park, Rosedale, Kingsway, Forest Hill, South Hill, and Hogg’s Hollow continue to experience strong demand for high-end product with prime properties moving in multiple offer situations.

Expected to further bolster demand is immigration. Over the past year, it’s become increasingly obvious that immigrants are not waiting the traditional five-year period to make their moves – some are making them immediately upon arrival.

Tighter lending criteria is also expected to send purchasers into the market in coming months. Looking forward, all indicators point to a heated Spring market in the Greater Toronto Area, characterized by unprecedented demand and limited supply. Average price will continue to climb unless more listing inventory comes on stream.

Article from Re/Max Market Trends Report 2010

Click here to see the entire report

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Filed under: Real Estate News

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