The flurry of interest among Toronto home-buyers to finalize home purchase
deals in the beginning of 2010 was caused by two factors. One was the
forecasted increase in interest rates and the other was the introduction of HST
(harmonized sales tax) in July. This intense activity as reported by mortgage brokers and real
estate agents, has since cooled down.
As reported in the Financial
Post, TD Securities’ portfolio strategist Ian Pollick said that while low
interest rates were encouraging people to buy homes, in 2011, the Toronto
housing market would see a slower rate of home price gains. He attributed this
slow pace to the large number of condominiums being built.
BMO Capital Market Economist Robert Kavcic said that
building starts continue to do well, despite year-on-year sales falling to 20%.
Single family housing starts have fallen sharply but multiples have performed
quite well. In the last ten months, housing starts have averaged around 28,000
units. While this is higher than the starts recorded during the recession, the
number is lower than the 40,000 units average prior to recession.
Mr. Pollick also said that while condos have become popular
due to their comparatively modest prices, the low interest rates are also
encouraging buyers to wait a few months and save up to buy detached, individual
homes. But considering the rate at which condos are being constructed, it is
possible that buyers could be pulled away from the detached/semi-detached home
market.
