Now that we have seven months of the year behind us, the pattern is fairly clear. Toronto average home prices rose from January to May, 2010, and have been declining since then. Fall prices will probably show some monthly increases from September on, but the year’s high point will probably not be matched again till sometime in 2011. The overall arc of prices corresponds pretty well with our typical seasonal pattern. I’m guessing that when we get to look back on all of 2010, it will have been the most “normal” year in Toronto real estate since 2006.
It’s interesting to note that market psychology doesn’t always match the pricing record. In many parts of Toronto, bidding wars were common until March, but increasingly less frequent from April onwards. Average prices, however, continued to increase through May, and were still higher in June than in February. I find this data reassuring, since it tends to indicate that buyers right now are focusing on the perceived value of the properties themselves, rather than the tactical aspects of how to beat the other buyers. ( Joanne and I routinely do an exercise with our buyers, in which we put aside the listing price of a property and ask ourselves, what value would we put on it?)
Mortgage rates continue to be extremely low. The publicity given to the central-bank rate increases and corresponding posted rates for consumer lending gives many people a skewed picture. In reality, fixed-rate 5-year term mortgages are still being offered at 3.79%, with variable rate products available in the low 2’s. For most buyers, low rates continue to help with the cost of home ownership. The big challenge today is how to get the most value for dollars spent… and that is a subject for a different discussion.