GTA Home Prices Up 23% Since 2008

Excerpted from Toronro Star..

Toronto housing prices up 23 per cent since 2008

Sales in the GTA were down 2.3 per cent from May and almost 8 per cent over a year ago, but are up sharply over the past five years.
DICK LOEK/TORONTO STAR

By Ashante Infantry | Tue Jul 24 2012

Toronto housing prices are up 23 per cent since 2008, according to a Municipal Property Assessment Corporation (MPAC) report on residential sales trends.

The hot spots, cited for the most significant increases are: northwest and southwest Scarborough; detached, semi-detached, and town homes north of Bloor St. through the central part of the city, close to amenities and the subway; and Mimico.

Rising sale prices of residential property in Toronto are driven by a number of factors, including immigration, foreign investment, low interest rates, the attractiveness of an urban lifestyle, and shortages of both developable land and homes for sale, said the report.

And in a city experiencing unprecedented condo growth, bungalows on large lots are coveted; they are being purchased for land value alone and have increased by up to 50% since 2008 to $1 million or more in some neighbourhoods, with buyers willing to pay a premium to build the home of their dreams, says the study.

The Market Snapshot, which tracked prices over the past four years in selected municipalities, echoes the observations of the Toronto Real Estate Board, said its senior manager of market analysis, Jason Mercer.

“Since we came out of the recession, in the second half of 2009, and what initially was a housing based recovery, we’ve seen tight enough market conditions to see very strong upward pressure on home prices,” he said.

“With a little bit more supply in the market we’ve started to see more listings come on line, so that should see a bit of moderation in terms of price growth. We’re expecting the average price to continue to grow, but just at a slower pace.”

During the same Jan. 1, 2008 to Jan., 2012 period, MPAC found the average sale price for residential properties in Ontario rose by 17 per cent.

The report underscores the continuing strength of the province’s real estate market, said Larry Hummel Chief Assessor for the Pickering-based non-profit corporation.

“The continuing strength is very positive, particularly when you look close to the border,” said Hummel. “You always expect that the trend that occurs there occurs in Canada, but we’ve reversed that situation” through prudent financing and not overbuilding.

While a sale price reflects mutual agreement in one particular transaction, an assessment, or a property’s current value, is based on the most probable sale price based on an analysis of all sales transactions from the local real estate market.

“We know in the Toronto market, by reading reports, that some people are more motivated than others,” Hummel. “Someone might have missed out on the last seven bids on a house and there may have been ten people competing in the auction; another month later, the market may have changed a little bit and there were four houses on the street available for sale; it’s not the same exact conditions and people bidding on those houses may not be nearly as motivated; or the person selling the property might be more motivated or less motivated. We analyze all of the sales prices in that local market in order to come up with the most likely or probable selling price.”

Toronto’s gains were the second-highest in the GTA: behind York Region’s 28 per cent, but ahead of Halton-Peel (22 per cent) and Durham (12 per cent).

Northern Ontario shows the biggest growth across the province with Timmins leading at 29 per cent, followed by Thunder Bay (26 per cent) and Sault St. Marie (25 per cent).

“What’s driving that is the increase in commodity prices and infrastructure to support the mining industry,” said Hummel.

In September MPAC will begin mailing out Property Assessment Notices for Ontario’s nearly five million properties with the assessed market value as of Jan. 1, 2012. Municipalities use the assessments, based on analysis of actual sale prices of similar properties, to calculate property taxes.

“Property owners should remember than an increase in assessment does not necessarily mean an increase in property taxes,” said Hummel. “It all depends on a number of factors including the amount of revenue required by your municipality or taxing authority to deliver services.

“If the assessed value of your home has increased more than the average for your local community, region and province, you may pay proportionately more in property taxes. If your home has increased in value less than the average, then you may pay proportionately less in property taxes.”

To help provide an additional level of property tax stability and predictability, the Ontario Government has introduced a phase-in program where market increases in assessed value between January 1, 2008 and January 1, 2012 will be phased in over four years (2013-2016). The full benefit of a decrease is applied immediately.

Hummel said Market Snapshot was developed as part of MPAC’s commitment to openness by sharing information about how assessed values are calculated with property taxpayers.