Remax Decade in Review for the Greater Toronto Area (GTA)

The last decade has proven to be one of the best on record for real estate in the Greater Toronto Area (GTA).

Despite an abundance of obstacles-from a high-tech meltdown and 9/11 to SARS and a credit crunch south of the border-the housing market has shown remarkable resilience over the past 10 years. After a dismal early 1990s performance-one that saw housing values decline close to 28 per cent over a six-year period-the bounce back started. Home sales jumped four per cent to 58,014 units in 1997, while average price, at $211,307, posted a seven per cent increase from rockbottom levels recorded in 1996. Average price would continue to climb each subsequent year, culminating in a 78.1 per cent increase by 2007-for a 5.9 per cent compounded rate of return annually.

Unit sales-which started the decade at 58,014 have climbed to 93,193 units in 2007-a 61 per cent increase. Sound economic growth, solid consumer confi dence levels, in-migration and immigration, prevalent throughout the 10-year period, have been in large part responsible for the buoyancy. Population growth has also played a role, as Toronto's CMA has risen by approximately 20 per cent to over five million.

Stock market gains have filtered their way into real estate, further stimulating home-buying activity, especially in the upper-end of the market. Sales of homes priced in excess of $1 million soared from 175 units in 1997 to 2,309 units in 2007-a 1,219 per cent increase. In fact, the average price in the central core (Toronto Real Estate Board's C District) was just over $900,000 in 2007, with a number of areas reporting average prices over the $1 million benchmark. Forest Hill, Rosedale, Lawrence Park, Hogg's Hollow, Bridle Path and the Kingsway remain most coveted, although there are several new million-dollar infill communities including Ledbury Park and Lorne Park.

Unique blue chip neighbourhoods continue to demonstrate the importance of location, location, location. Most have seen tremendous price appreciation over the past decade, with Leaside, Bloor West Village, the Beach, High Park, John Ross Robertson and John Wanless typically exceeding the GTA average year-over-year. To illustrate, one Leaside property that sold for $470,000 in 1997 was resold in 2007 at a substantial $1.55 million. Although the home had been renovated, it's unlikely the renovations cost $1 million.

Pent-up demand has also influenced the local market, re-igniting home-buying activity in the GTA in the latter half of the 1990s. First-time buyers spent much of 1996 watching housing values bottom out. When the trend started to reverse in 1997-and prices started to climb- buyers entered the market in droves, taking advantage of fi ve-year posted rates that hovered at a 30-year low of seven per cent. While initially driving sales for singledetached homes, entry-level buyers found that, in the latter half of the decade, condominium apartments and town homes were a more affordable alternative to singledetached homes.

The condominium lifestyle really took off in 2007, with first-time buyers and aging baby boomers leading the charge. Condominiums represented approximately 35 per cent of total residential sales in December 2007, up from 30 per cent during the same period in 1997. Double-digit increases were reported in 20 percent of TREB districts last year-and in TREB's central and west districts, condominium appreciation surpassed year-over-year gains reported in the single-detached category. Six districts reported extraordinary escalation in 2007, including Bayview Village and Yorkville where values rose 40.7 per cent and 31.4 per cent respectively. Affordability will continue to drive condominium sales with resale product expected to enjoy solid demand for years to come-especially along the waterfront and in the downtown core. However, absorption rates may fall in 2010/2011, as an abundance of new condominium product comes on-stream.

Inventory levels have been the key component in market activity over the past decade. Despite a substantial increase of 78 per cent in unit sales, inventory levels remain exceptionally low. By year-end 2007, the central core showed a nominal 25,000 properties listed for sale-similar to 1997-yet the sales-tolistings ratio had increased from 34 per cent a decade earlier to 69 per cent. The 2008 forecast for the GTA suggests another solid year of sales activity, tempered by more moderate price appreciation. However, if supply continues to be tight, values are expected to experience more pronounced increases.

"From Remax Press Announcement-Remax.oa.com"