Toronto, July, 2012 – Greater Toronto Realtors reported 9,422 home sales through the Toronto MLS system in June 2012. The number of transactions was down by 5.4% in comparison to June 2011. The year-over-year decline was largest in the City of Toronto, where sales were down by 13% to June 2011. Sales in the rest of the Toronto Real Estate Board (TREB) market area were comparable to a year ago.
“Buyers continue to face the substantial upfront cost associated with the City of Toronto’s unfair Land Transfer Tax,” said TREB President Ann Hannah. “Recent polling by TREB suggests that many households are considering home purchases outside of the City of Toronto to avoid paying the Land Transfer Tax. This goes a long way in explaining the disproportionate decline in sales in the City versus surrounding regions.”
The average selling price in June was $508,622 – up by 7.3 per cent compared to June 2011. The mortgage payment associated with the average priced home in June, assuming five per cent down and a five-year fixed rate mortgage amortized over 25 years, would account for approximately 35 per cent of the average household’s income in the GTA after adding property tax and utility payments.
“According to new mortgage lending guidelines set out by Finance Minister Jim Flaherty, the GTA housing market remains affordable. The share of the average household’s income going toward major home ownership payments for the average priced home remains below the 39 per cent ceiling recently announced by Mr. Flaherty,” said Jason Mercer, TREB’s Senior Manager of Market Analysis.
“The average household in the GTA continues to benefit from a considerable amount of flexibility to account for higher interest rates moving forward,” continued Mercer.
What’s it mean?
It means prices still defy gravity, but probably for not much longer. Markets always cool off in July and August, just like the average Canadian. Add to that cooling is a little ice thrown on by the Federal Government with their tightening of the mortgage requirements. While it demands a little more due diligence on the part of buyers, it also allows them to catch up to prices and still take advantage of low interest rates.