Heated housing activity throughout 2009 lends little air to bubble theory in the GTA, says RE/MAX

According to  Thursday's press release from RE/MAX Ontario-Atlantic Canada, despite limited inventory levels in the Greater Toronto Area in the latter half of the year, double-digit price appreciation failed to materialize in the single-detached housing category in 2009.

In fact, an in-depth analysis by RE/MAX of 63 districts within the Toronto Real Estate Board found that detached housing values in 27 percent of districts remained slightly off 2008 levels, while 57 percent reported price appreciation of less than five percent in 2009.  Sixteen percent of districts recorded an increase in average price in excess of five percent.  No double-digit gains were noted.

"There is simply no evidence of a housing bubble," says Michael Polzler, Exective Vice President, RE/MAX Ontario-Atlantic Canada.  "While sales were up considerably over one year ago - and supply was tight in many of the city's hot pocket areas - the expected surge in average price did not occur.  Buyers remained cautious in their pursuit of homeownership - with  most unwilling to overpay for the privilege."

While one quarter of all TREB districts saw prices in the detached housing category soften in 2009, just over half declined by less than two percent.  Those that saw prices fall by more than two percent were primarily upper-end neighbourhoods - the vast majority located in the central core - which were slower to rebound once the market regained momentum.  By year-end, however, sales in all these areas posted double-digit growth - a fact that clearly indicates a greater number of transactions at the lower end of the price spectrum.  Inventory may have also played a role as sellers held off listing their lucury properties until market conditions improved.

"First-time buyers were a driving force throughout much of the year, but their role was most noticeable in early 2009," says Polzler.  "Almost one in every two homes sold was priced under $400,000 in the first quarter of the year.  An entirely different picture emerged in the final quarter when just one-third of homes moved under the $400,000 price point."  As the move-up segment swelled, so too did demand for more upscale properties across the board.  Yet, despite the upswing, average price registered only a small percentage increase.

"After a dismal start, the stats confirm that 2009 returned to the healthy, upward trajectory that we have followed for much of the last decade," says Polzler.  "We see detached homes continuing on that course in 2010, with moderate gains expected.  The detached housing category continues to be a solid gauge of the market's overall performance, accounting for approximatley half of the activity in GTA."