Real Estate Indications Show Drop In Prices

Yesterday I wrote a blog about how I had seen the price of a condominium unit at 12 Yonge Street drop by 7.5% over the last two months.  This morning I read in the Globe and Mail’s Real Estate section that real estate prices have dropped much more than that in the first quarter of 2011 compared to 2010. 

According to real estate expert John Pasalis of Realosophy Realty Inc., “For example, Rosedale house values show a 42 per cent decline, Q1 2010 to Q1 2011…”  Wow, that is one of the most expensive neighbourhoods in Toronto with houses costing well into the millions.  Imagine owning a $1,ooo,ooo house and then seeing its price chopped to $580,000.  Maybe those homeowners can afford to loose a whopping $420,000 or maybe they have no choice.

Other examples of neighbourhood real estate price comparison between Q1 2010 and Q1 2011 show:
Humber Valley – down 36%
Allenby – down 23%
Bathurst Manor – down 17%
Chinatown – down 17%

As I said yesterday, if you’re thinking about selling your home sell it soon and if you need a place to live rent for now because it is 25% cheaper than ownership. In other words, home prices in Toronto are atleast 25% overvalued.

Real Estate Prices Dropping In Toronto

Despite what the headlines have been saying about Toronto prices staying firm, the evidence shows that prices for condominiums in the downtown core have already started a steep decline.

Two months ago a  two bedroom condominium (NO DEN) at 12 Yonge Street was selling for $450,000.  Today I saw a two bedroom PLUS DEN in the same building going for $435,000.  That is a drop of about $35,000 ($450,000-$435,000 plus $20,000 for the den)  in just 2 months.  This represents a drop in price of 7.5% ($35,000/$470,000).

Beware if you’re buying a condominium in Toronto, the bubble seems like it has begun to burst.  If you need to sell soon, sell now not later.  If you need a place to live, rent the condo because it is 25% cheaper than owning.

Now is a time to be smart not emotional about real estate.