The first week of December was a good week, economically speaking, for the Greater Toronto Area and Canada more broadly. We had two waves of positive financial news. First, Statistics Canada announced the Canadian economy grew in the third quarter -the first quarter of growth since the third quarter of 2008.
This was followed by encouraging employment numbers. In Canada, a whopping 79,000 jobs were created in November and the unemployment rate dropped slightly. In the Toronto area, we experienced the fourth straight month of job creation. This was the backdrop for another strong report from the Toronto Real Estate Board. November’s existing home sales in the Toronto area were up strongly on an annual basis to 7,446 (up 105% from a depressed November 2008, but within 2% of the total in November 2007), and the average home price climbed 14% to $418,460.
Jason Mercer, TREB’s senior manager of market analysis, points to the strong link between the housing market and renewed growth in the economy: “Economic recovery to date has been consumer driven, with housing playing a key role. The fact that the GTA housing market has remained affordable over the past decade, coupled with record low mortgage rates, meant that as consumer confidence recovered, home ownership demand rebounded very quickly. These transactions resulted in spending that benefited other sectors of the economy, including such financial and professional services as mortgage brokers and lawyers, renovation and repair contractors, moving and storage companies and home furnishings retailers to name a few.”
By all accounts, when the final resale numbers are released for December, total sales will likely align with the healthy results we had in 2004 through 2006. This will represent quite a recovery from the lows in sales and price we hit at the beginning of the year.
With that said, however, it is important to point out we will not see sustained double-digit rates of growth in sales and average price moving forward.
“Right now,” Mr. Mercer says, “we are comparing sales and prices in the recovery phase of the housing market cycle to last winter’s decline phase, when the demand for ownership housing dropped sharply over a very short period of time. After the first quarter of 2010, reported rates of growth will not be as large because we will be making comparisons to the stronger sales and price numbers from this past spring and summer.”
I think, if asked, most realtors would say they expect more homeowners to list their homes for sale next year as they react to the strong sales and price growth in the second half of 2009. Mr. Mercer says that “with more homes to choose from, market conditions will be more balanced in 2010 and average annual price growth will be more in line with the long-term average. To put this in perspective, the average annual rate of price growth has been approximately 6% since the turn of the new millennium.”
I am happy that as we move through the holiday season, we are starting to hear more good news than bad on the economic front and that growth in the housing market is expected to continue at a sustainable pace next year. I wish you all a safe and happy holiday season and look forward to communicating with you in the New Year.
Tom Lebour is president of the Toronto Real Estate Board, a professional association that represents 28,000 realtors in the GTA.