Wednesday, November 29, 2006

2007 Housing Market Predictions - Read what will happen next year!

Toronto Real Estate Board (TREB) Average Prices and Graph
I received an email from a reader and thought I would post my answer to his questions on my blog for everyone to read. The question was:

Hi Mark,
I am impressed with your article on housing dated Oct27.2005
I request you to e-mail me if you have any latest articles.
I have a property in Brampton and thinking of either selling or renting depends on housing market stability, market direction and future predictions(of course as you rightly mentioned no body can predict 100% but intelligent guess with present facts might be helpful)
So I would be grateful to you if you throw some light on to me whenever you find some minutes to type
thanks in advance
regards
N.N.


Hell N.,

Thank you for your real estate inquiry and your kind comments about my website. Predicting the future real estate market can be tricky. I remember back in 1990 an analyst with Wood Gundy who predicted that the GTA market would fall 25%. I also remember that he had to make a full public retraction of his extremely negative predictions on the real estate market. Wouldn't you know it, the market ended up dropping about 35% by the end of that last real estate recession. The analyst was wrong, he was not negative enough!

If I had that 'crystal ball' for the future of real estate, it would certainly help. My observations are that the press and the 'general economic mood' probably has the greatest effect on the direction and strength of our real estate market.

No matter what the papers have been printing, the market in Brampton and Mississauga has been soft since about May of this year. We just experienced a mini-surge of activity in our areas over the past 4 weeks, but our market is slow right now. Our phones at our office are not ringing and there are very few appointments on our office listings. This means that there are not many buyers out in the marketplace right now. This is true for most real estate offices that I have visited over the past few weeks in our region. The buyers seem to be taking an early holiday break. Historically, our market does not slow until about the 10th of December, but for this year, it appears to be slowing about 2 weeks early.

There is great demand with buyers who are waiting to take the plunge and purchase real estate. People are very "wait and see" in the GTA and I believe many are waiting for interest rates to drop again. This may or may not happen over the next few months, anyone's prediction is as good as the other. It is almost certain that the Bank of Canada will not increase rates in the foreseeable future.

The central banks are cautioning most investors and predicting lower rates next year. With this said, if you have a property that you want to sell, this is a good time of year to sell. See why at this page.

Anything that is priced well and shows well will sell in our market. This has always been my observation since I've entered this business in 1987 and I believe it will always be a fact in real estate. Location, price and condition of a property dictate whether it will sell or not. The agent you choose will help you attain more money in your pocket and help you sell at the highest price and best terms for you.

From what I've been reading lately, the US economy will experience a softer landing than what first predicted and this will have a very positive effect on the US economy. This will trickle over the border into Canada and we should see some strengthening of our market in the next quarter. I truly believe that we are in for a very good spring market. As well, as long as the weather is not brutally cold in January and we don't get two feet of snow and/or two blizzards in January, I believe our spring market will begin early this year, mid to late January or February at the latest.

Historically, our real estate market in the Mississauga, Brampton and GTA peaks beginning about the end of the March break and ending about the end of April. See the historical seasonal trends here. Given the pent-up demand in our marketplace, we could see a shift of the spring market and our market may be very strong in February of 2007. I can see this happening, so if you are thinking of selling in the spring, you may be wise to get on the market earlier rather than later to capitalize on the early market strength.

Regarding the rental market in the GTA. Our rental market has tightened up considerably compared to the previous 2 years. From 1995 to about 2003 the rental market was absolutely 'on fire' and rental properties were in huge demand. Then in about 2003, investors had difficulty getting quality tenants at a good monthly rent for their properties. This was mostly due to the fact that mortgage interest rates were so low, as low as 2.5%, that most quality tenants were buying rather than renting because it was so much cheaper. Now that interest rates have increased to their current levels of about 5.5%, generally, it's become less expensive to rent rather than buy. Thus, the rental market has firmed up and the pendulum has swung back in favour of the investor.

I hope this helps a little to answer your questions. I will post this on my blog for others to see. Any comments from your end would be appreciated.

Please let me know if you have any other questions or if there is anything else I can help you with.

Thank you again for contacting me and I will do my best to help you with your real estate needs,

Mark

More reading about 2007 predictions at my site.

For more information please contact A. Mark Argentino

A. Mark Argentino Associate Broker, P.Eng.,
Specializing in Residential & Investment Real Estate
RE/MAX Realty Specialists Inc.
2691 Credit Valley Road, Suite 101, Mississauga, Ontario L5M 7A1

BUS 905-828-3434
FAX 905-828-2829
E-MAIL mark@mississauga4sale.com
Website: Mississauga4Sale.com

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