Friday, April 04, 2008

Housing is crashing -- unless it's not

Interesting news in the ol' newspaper this morning, albeit it's info I'm taking with a grain of salt.

Toronto real estate is off to its worst start to the year in years, with the number of housing resales dipping 22% in the first three months of the year, Tony Wong reports in The Star.

Some are blaming the dip on the city's much-publicized new "land transfer tax" (meaning there are less buyers now because there was a rush in December to get in under the wire) while others, somewhat less convincingly, are blaming the weather. I have my doubts that people are so simple as to be influenced in as major a decision as buying a home by something as nebulous as the weather, but as a friend who recently took the plunge into real estate told me, "the best piece of advice I can give you if you want to save money when you buy a house is to do it in January, and look for a house that's been on the market for a while."

That's quite the number -- 22% -- but I'm not getting carried away quite yet for a couple of reasons. No. 1, real estate was at some pretty lofty heights to begin with, so pulling back a little isn't particularly indicative of anything to me. And No. 2, shrinking volume might suggest overall activity is down, but to me, the more significant number is what's happening in prices. If prices slow their increase (never mind actually come down) that's a much more significant development, because it would signify, in broad terms, that people are actually at the point of taking losses -- not just acting a little hesitant about the process of moving in general.

So far, that doesn't appear to be happening, as this pdf shows. Overall prices are up about 4% GTA-wide, although there are some regional dips. That million-dollar house in the Annex I've been dreaming about got 6% cheaper, down to a mere $759,000, for example...

Getting closer!

As much as I'd love doomsayers like Garth Turner to be right this time, I'm not holding my breath. Still, as someone on the outside moving in, this is certainly a trend worth keeping an eye on.

1 comment:

Vasile said...

Hi! If the snow banks are high and you cannot safely park on street in front of the house, would you adventure to visit houses? Or just wait for it to go? After all, buying a house is generally not an urgent issue, so postponing for a couple of months is not a big deal for most people. So the argument makes sense to me.

Many of the "house buying" books I read recommend the winter for the closing the buy, since you can get better deals. Speaking with some RE agents, they told me that in the last few years they didn't see a slow in the winter months (because of the hot market?). So maybe now we're just going back to the regular ways of RE busines?

In my opinion, the winter plus the Toronto land tax plus the media attention to the US RE may be all responsible of the slowdown. Which, by the way, can be really useful for those entering the market :-)z