Resale home price gains slow - Toronto Star 01/13/06

I found this interesting Article from the Toronto Star. I think that it is interesting that the press is still trying to predict the end of this hot market. The Toronto Real Estate Board statistics from this year so far dispute the declining of the market as sales are up over the same time last year. Enjoy...

Riverdale, Beach, Scarborough and Markham lead

Rising prices likely to moderate this year and next

Jan. 13, 2006.
By Tony Wong
BUSINESS REPORTER

Despite a record-breaking year for home resales in the Toronto area, higher inventory levels in 2005 meant home prices have not appreciated as rapidly as in previous years and they are expected to moderate even more in coming years, says a survey.

The average price of a benchmark two-storey home in Toronto increased by 4 per cent to $461,282 by the fourth quarter of 2005, compared to the same period a year earlier.

The condominium boom, meanwhile, kept a lid on condo pricing as a surplus of inventory, particularly in mid-range two-bedroom units, meant prices rose a relatively mild 3.6 per cent to an average $242,202 year over year.

Home buyers who purchased detached bungalows did the best, with prices appreciating 6.6 per cent to $362,611, according to a quarterly survey of 24 Toronto area neighbourhoods released yesterday by Royal LePage Real Estate Services.

"2005 will go down as one of the great years in housing activity. But we've been climbing this mountain of appreciation for a while now, and the top has been in sight, which I think we'll finally reach in 2006," Phil Soper, president and chief executive of Royal LePage, said in an interview.

This year and next will be spent "on what feels like flat ground compared to what we're used to," said Soper, who is forecasting home prices to moderate even more. He says average home prices should match or go up by slightly more than inflation over the next two years.

While the strong economy helped to maintain demand in the Toronto market, some entry-level buyers opted to remain out of the market as higher vacancy rates created pressure on landlords to reduce rents, according to the LePage report.

More resale homes were also placed on the market as homeowners moved up to newly built condos and homes.

Meanwhile, homeowners in the Toronto neighbourhoods of Riverdale, central Scarborough, the Beach and Markham, saw the biggest price appreciation in the value of a typical two-storey home last year, says the survey.

A two-storey home in Riverdale increased by 13.8 per cent to $330,000 as buyers started to look for affordable housing in a family friendly neighbourhood.
"Riverdale is still a relatively affordable core city neighbourhood that is half the price of some other central neighbourhoods, so people are responding to that," said Soper.

Central Scarborough homes are now averaging $304,000, up 9 per cent, while homes in the popular Beach district are up 8.7 per cent to $500,000. Markham homes are up 7.5 per cent to $385,000.

Unlike other surveys, Lepage's looks at specific types of housing within a range of Toronto area neighbourhoods, rather than taking a look at all housing types and giving one average price.

The Toronto Real Estate Board reported last week that 2005 was the best year ever for home resales. Last year, 84,145 homes changed hands, up 1 per cent from the record set in 2004.

Most housing analysts were expecting 2005 to be slightly below 2004, but good job growth and affordability meant that the housing market remained buoyant.
Still, Toronto's more mature housing market means that it is something of a laggard in house prices.

Victoria led the pack with a standard two-storey home up by a staggering 21.2 per cent to $394,000 at the end of 2005.

Calgary, which is experiencing a housing boom because of rising energy prices, experienced a 15.5 per cent increase to $282,989, while Winnipeg hit $189,100, up 13.2 per cent.

"Over the next few years you will see a continued geo-political shift as wealth and migration transfers to the western provinces," Soper said.