Last year, it was widely prediected that the Toronto real estate market would experience a "cool-off" or even a minor correction. First quarter has just wrapped up; so far in 2012, the hot Toronto market is showing no sign of letting up.

In the past February, the average selling price of homes in Toronto have climbed another 11% compared to February 2011, and broke past the $500,000 mark. No doubt, the market continues to be assisted by the low interest conditions.

While many observers argue that the Toronto market must cool off because affordability is declining and residents' incomes simply aren't growing as quickly, our view is that such opinions fail to take into account the large amounts of foreign investments that get put into our housing market each year. Nor do such views take into account the large number of immigration (often with large amounts of capital). Anecdotally, many real estate agents also report hat many current buyers are either foreign investors or new immigrants. When we take these factors into account, it's easy to explain the real estate market's hot streak in Toronto.

You can read our own predictions of the Toronto real estate market in 2012.

Nothing quite like the new year to bring out the predictions for what the housing market will be like for the upcoming year. This year, many financial institutions are predicting that the Canadian housing market will slow down and show "classic signs of overvaluation, speculation and oversupply."

On a regional basis, the biggest story last year was Vancouver of course, and it was a tale of two halves: the first half was blistering, and the second half came back down to earth. In fact, by year-end, both sales and prices were down from year-ago levels in Vancouver (see attachment for the table). Worth noting is that just as high-end sales distorted the totals to the high side early last year, weaker sales in that space are now skewing the overall results lower. The local real estate board reports that a quality-adjusted average home price in fact rose more than 7% y/y in December. Similarly, Toronto also cooled by year-end, with price increases easing to 4% y/y, after posting high single-digit gains through the fall.

Our own prediction is that low interest rates will continue to bolster the Toronto housing market and counter the effects of increased prices and household debt. While we believe that condominiums are more prone to price declines in 2012, we rest are pretty confident that the freehold market will stay flat or grow slightly.

We would like to issue a sincerely apology to our users. Over the course of the several days, you may have noticed that our site was intermittently down with a message that said "Account Suspended". The cause of this down time was because our hosting service, JustHost, had unreasonably shut down our account claiming that we have been using too much system resources in CPU time. Not only do we think this accusation is unreasonable, we also felt very violated because they had just shut down our servers.

Needless to say, we are not happy with them, and now we have switched to a new, and much more reliable hosting service. As far as we know, all issues are now resolved, and we do not expect any more down time.

Please accept our sincere apologies.

We want to wish all of you a wonderful 2012! 2011 has been very good to us. Not only did we launch our site, we have also gained a lot of traffic and helped hundreds of Torontonians find great Realtors®!

We are looking forward to a even better 2012. Wish you all the same!