When the US real estate bubble burst some two years ago, innumerable Canadian home owners, future buyers and professionals started to ask: ”What will happen to the real estate market in Toronto or Canada in the future?”

There were two crucial causes for this fear. First, Canadian real estate market, as our complete economy, has powerful relationship to the circumstances in the USA. Furthermore, we could see from the way the Canadian property market was developing in 2006 and mainly in 2007, that a comparable bubble could appear here too. Now let's look at the situation nearly a year after that.

I personally count myself among the optimistic part of the population, but apparently between years 2008 and 2009 we were only a minority against many people who saw the situation rather pessimistically. Monthly year to year sales figures demonstrated a great decline, culminating at January’s -47% (compared to January 2008). So it's unmistakable that the "depression panic" from fall 2008 has hit Canada. No wonder that most people were anxious about making any fundamental financial decisions, resulting in the housing market almost coming to a halt. Some "experts" looked at the circumstances and predicted Canada confronting similar crisis as in the USA. However, the reality is quite different. Now we will examine the 2009 figures.

Number of sales and year-to-year change

The most representative and closely watched indicators. Looking at these indicators, it is evident how the market froze in during the winter months. However, June sales scored more than four times higher than December ones. May was the first month in this term when we watched sales growth (compared to the same month in previous year) and June's +27% showed the Toronto property market is back on the horse.

Days on market

Another important characteristic. While the previous ones draw the volume of the market, Days on market show us the speed and freshness. This factor is important because from the whole market volume statistics we cannot tell how long it would take for your property to get sold - it just gives us another viewpoint of the same problem. Even in the most difficult days in January, the average "days on market" figure was only some 14 days higher. Confronted with South Florida or Detroit, where days on market value got close to 120-150 days, our slowdown was insignificant.

Active listings flow change

Indicates the property market's mood. It is based on watching the number of new listings on the market. If the home owners are worried that their property price would decrease and they want to save their investment, the inflow is naturally increasing, while the opposite situation is generally considered as a positive time to buy property. It can forecast the future of other factors - we saw positive change in listings flow after January as a market turn sign.

Average price

This one usually draws the most attention from my real estate clients. Usually, one of the most important items on people's property list is their home, which means that every market move can result in the owner getting thousands of dollars more or less. It was not until April 2009 that the price decline from the previous autumn was overcome.

Why is the market doing so well?! We can still find negative economic news nearly every day. So why has such a swift recuperation of the real estate market occurred? We can name two main factors:

1. Failed expectations

The collapse of the US real estate market was observed by many Canadians, who then expected the same would happen in their country too. But we have to remember that the basic problem of United States was in the subprime sector. A chain reaction originated out of a few problems that were not resolved at the beginning. In the beginning, the prices dropped. Therefore, toxic mortgages could not be covered by foreclosures and short sales. Logically, the banks had to throw more foreclosured homes on the market, which resulted in the prices falling even lower. Very limited subprime sector with a small amount of foreclosures and healthy (I am not afraid to call it extraordinarily healthy) financial system secured the Canadian real estate market. Homeowners became aware of this fact very soon and calmed down.

2. Stabilized economy and buying opportunities

Now we will briefly analyze the statistics about inflation, unemployment, GDP predictions and interest rates. If we look at the real estate prices explanation, we can clearly see the importance of these numbers for the real estate market. Despite the fact that these figures concerning employment or economic growth could look even much more optimistic, we can be quite relaxed: our economy is far from a collapse, it is only slowed down, in a stagnation period. All these arguments also helped to stop the winter real estate panic.

Conclusion and the future

We can say that in addition to enduring the winter depression, Toronto real estate market has got well very quickly and now it is growing again. We can even call the condo resale market as hot now. Especially people looking for their first home have now huge opportunities, looking at the low interest rates and good prices after a year break. Now it is also great time for investors to pick some cherries, as their prices still haven't recovered. Vendors can relax too – the market is fast and their property will be sold probably within a month for a reasonable price. In the following couple of years, sudden price burst and bubble creation are quite unlikely, due to the pertaining level of uncertainty and slower labor market. From the rare market growth of 27% in June we can tell that the market is trying to get to its previous speed and volume and it is likely to get stabilized soon. Ontario's economy can rely on Toronto real estate market as its compact foundation of stability even in wild times.