Seasonal is good
I actually got a sense of relief seeing the early July numbers for the Toronto-area MLS sales. This year’s run-up from January to June was dramatic. A typical price increase during the first six months of the year is in the range of 4% to 7%. In 2009, this increase was over 17%. As the above chart makes clear, there was a lot of recent history to react to. Again, it’s entirely typical for average home sale prices to decline slightly through July and August, often between 3% and 6%. (In 2008, the average dropped about 8% over those two months, which was pushing the envelope, but not unprecedented… A similar drop occurred in 1998.) This year, the early July average was off almost one per cent from June’s figure. It doesn’t seem likely that prices will drop too far this summer, since some parts of the GTA are clearly heading for new highs at this time. Still, seasonal patterns are signs of stability and predictability — we could do with a bit of that this year!
It’s worth repeating that local areas and market niches will always behave differently. This summer, many neighbourhoods are experiencing high prices due to shortages of attractive listings. It might take only a dozen extra homes or condos in a given area to change the balance in that location.
Since fixed-rate mortgages were adjusted upwards about five weeks ago, we’ve started to see rates edging downwards again. Five-year term lending is now available at 4.39%, with some four-year terms quoted just under 4%. Variable-rate mortgages are actually being quoted lower than in the spring… TD Canada Trust has recently been offering five-year variable rate products at 2.85% (closed) and 3.25% (open).
These mortgage rates are still at historic low levels, and they provide a wonderful opportunity to make home ownership more affordable.