I’d like to apologize for the dozens of inquiries I still need to respond to as returning from the land Down Under has taken a toll — jetlag, it would seem, is not to be taken lightly. Amongst the many enthralling experiences I had in Australia, a question from a couple of fellow vacationing Torontonians knocked me for a loop. Buyers Nita and Satnam asked me if waiting until their financial situation improved was futile, since — as it seems — the same home they want to buy is going to be priced $50,000 more at that time. Makes you cringe, doesn’t it? It shouldn’t, and here’s why.
To understand where we’re headed, let’s first look at the market today. October 2009 saw a total of 8,476 sales, up an incredible 64 per cent from last year, alongside an average price of $423,559, up 20 per cent. How did this happen when we’re supposed to be in a recession? Well, the unique supply vs. demand we were faced with this year seriously skewed these numbers. At the onset of 2009, many owners decided not to sell, fearing the short end of the stick. At the same time, many buyers sought to cash in on the buyer’s market. The result, as anyone familiar with the first rule of economics will tell you, was unexpectedly high sale prices for the few homes on the market, as multiple buyers were forced to fight over limited listings.
Looming on the horizon for 2010 is everyone’s favourite tax hike — HST. In a nutshell, HST will affect the actual price of real estate that is new only, but will affect many of the services that are associated with resale homes, as well as new, such as commissions, legal fees, moving costs, etc.
But I don’t expect HST to breed as dramatic a real estate market shift as the simple dynamics of supply and demand did this year, simply because I expect supply and demand to balance off. This year was more the result of a very unique imbalance between supply and demand, and we’ve learned that HST will likely fail to have as dramatic an impact. Translation: Every home will not scorch to $50,000 higher, in a year’s time. Now having said all of that, I did tell my new friends that the prudent buyer would not overlook the time of year we’re in.
One of the worst kept secrets in real estate is that no matter what someone tells you, nobody actually wants to sell when it’s -20 C outside. In other words, while the home you’re considering isn’t necessarily going to jump $50K, it’s almost certainly going to be at least somewhat more attainable and affordable now.
