Toronto housing prices hit mid-summer slump

Toronto real estate prices have slid back to levels last seen in March, after reaching a higher average in July than the same time the previous year.

According to figures released Thursday by the Toronto Real Estate Board, the average GTA selling price in July was $459,122 -- "up by almost 10 per cent compared to the July 2010 average of $418,675," it said.

But the average GTA price peaked in May at $485,520.

The March average price was $456,147, while the January price was $427,037.

Jason Mercer, the board's senior manager of market analysis, told CTV News that they consider the year-over-year price to be a more "apples to apples" comparison.

Housing prices almost always dip each summer, he said.

"Over the last four years … every year, you've seen the price decline from the spring into the summer. Just as sales edge lower in the summer, so does price," Mercer said.

In the board's news release, it highlighted strong sales volumes last month, saying they were up 23 per cent over July 2010.

However, total sales in the first seven months of 2011 are down by 1.3 per cent compared to the same period in 2010.

"But what we're seeing is an acceleration in sales," Mercer said.

He said if the pace keeps up, the board still expects about 90,000 sales transactions in 2011, which would make it the second-best year on record.

The board released its statistics on a day when the TSX suffered its worst one-day drop since the start of the recession in 2008.

It declined by 435 points, or about 3.4 per cent, closing at 12,380.13, over fears of a slowing U.S. and global economic recovery. That follows several sessions of losses.

Mercer said economic confidence appeared diminished in the summer of 2010 over changes to federal mortgage lending guidelines, along with fears about interest-rate hikes and the impact of the HST. The new provincial tax, which is harmonized with the federal GST, came into effect on July 1, 2010, and applies to most real estate purchases.

"This year, we've seen consumer confidence remain quite strong," he said, pointing to Ontario's job numbers through to June along with positive news on income growth.

Moving into the second half of the year, it will be interesting to see if the turbulence in the equities markets hurts that confidence, Mercer said.

In the GTA market, homes remain relatively affordable, with basic expenses (mortgage, utilities, taxes) totalling about 31 to 32 per cent of household income, he said.

"That is certainly acceptable from a mortgage lending perspective, and it remains low from a historic perspective," Mercer said.


Source: Darren Calabrese / THE CANADIAN PRESS