Inflation slows hopeful sign for Canadian real estate economy

I know that you thought that the sales were going down and that interest rates and the HST had killed the market.

The bad month was supposed to be August. So, let’s have a look at the August numbers over the last 7 years.

Year………..Sales

2004……….6,743
2005……….7,498
2006……….6,976
2007……….8,059
2008……….6,318
2009……….8,035
2010……….6,232

The average number of sales in the month of August is 7,132. That means that this year we would be 891 sales short, which represents a 7.99% decline.

Just because there were 891 fewer sales in August, does that mean that the market has tanked? Some would say so. Just look at the current newspaper headlines, and the TV stories.

Let’s have a look at the annual sales figures for the last 7 years from January until the end of August in each year:

Year,,,,,,,,,,Sales

2004……….63,099
2005……….60,309
2006……….60,633
2007……….68,463
2008……….58,618
2009……….59.616
2010……….64,313

The average number of sales over the last 7 years from January to the end of August was 62,150. That means that in 2010, there were 2,163 additional sales which represents a 3.48% increase. Not too bad for a market that is tanking.

Now, let’s have another look at the numbers over that last 7 years. Only 2007 was higher at 68,463. That means that 2010 had the second highest number of sales for the first 8 months over that measurement period.

So, why all the worry?

Let’s have a look at 2010, month to month:

Mon………Sales

Jan……….4,986
Feb……….7,291
Mar……….10,430
Apr……….10,898
May……….9,470
Jun……….8442
Jul………..6,564
Aug………6,232

What you will notice is that March and April were exceptionally strong months. And, if there is a real estate story in 2010 about the market, it should be the strength of those two months.

Remember that the common advice in the Spring was:

• Take advantage of low interest rates, and
• Beat the HST

There’s really nothing unusual. The consumer just followed the common advice.

You can’t have the sales in March and April, and then expect them to be there in August too!

The 2010 market is simply performing predictably as it should.

Toronto Mid September 2010 Market Performance

You might very well wonder what’s been happening to Toronto real estate this year. It’s up, then it’s down. But, where is it now?

Actually, it’s just about where it should be. You have to remember that interest rates and prices were both a bargain in the Spring. Also, everyone was worried about interest rates going up in July and the new HST coming into force on July 1st. The standard, common advice was “do business before July 1st”. So, people did. And, if they did, then they can't buy again in the summer!