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My Real Estate observations and predictions for our local Mississauga, GTA and Canadian Real Estate market for 20072007 Real Estate Market Predicitons for the GTA

Specifically, if you are thinking of selling and/or buying a home in the next few months, this article will apply to you.

I received an email from a reader and thought I would post the question and my answer along with my predictions for 2007.

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.

Dear 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 the market is slow again 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.

Mark's Predictions for 2007

Conclusion that I draw from this and other sources

I believe that we will see a steady and 'normal' market in 2007.  We will not see the huge price increases that we saw in 2004 and 2005.  Prices should increase about 3-4%, a little better than inflation for the year.  As always, if you are thinking of selling, February or March may be the best months in 2007. 

This is what I predicted in December of 2005 for the real estate market in 2006.  I was just a little lucky!

It is interesting that many of the experts are predicting prices to rise only slightly for 2006, but nearly as not as much as they did in 2005.  I would agree with this line of thinking.  The last 4 months of 2005 showed signs of a more "normal" market.  The market so far in 2006, up to the end of February has been normal, but nowhere near the sales volume or price increases that were experienced in early spring of 2005.

As long as rates stay about where they are we should see another year with a healthy real estate market for 2006 with modest price increases.

And sure enough, it appears that 2006 price increases will be about 5% compared to the nearly 10% we saw in 2005.  The real estate boom in Toronto and the GTA is over, for the time being that is!  We will have another real estate boom in Toronto, it's only a matter of time.

So, if you are thinking of selling and buying a homes this year, should you buy or sell first?  I've had many clients purchase before they sell.  I just want you to have all the information so you can make the best decision for yourself and your family.  You may read more about buying or selling first here

I wish you much success, good health and happiness in 2007 and always! 

Past Issues of TREB Market Watch for Toronto Real Estate

If you would like to discuss issues like this or other questions you may have, please email me at anytime .

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