December 2011

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Commentary

The national housing market remains strong and steady, despite continued discussion of weakening economies in Europe. According to Gary Morose, CREA president, the increased concern about global financial market volatility in the news "doesn’t appear to have damped homebuyers’ spirits."

Gregory Klump, CREA chief economist, goes on to say, “Headline news about economic uncertainty has put only minor dents in consumer confidence.  How confidence evolves depends on how global turmoil plays out over the coming months.  Should global economic headwinds weigh more heavily than expected on Canadian economic prospects, the federal government and Bank of Canada have made it clear they stand by ready to take flexible and measured responses as appropriate.” He cites the foundation of this strong confidence as the fiscal and monetary policy responses during the last recession that helped pull Canada back into positive growth quickly.


A well-balanced housing market provides level playing field with opportunities for both buyers and sellers. Interest rates remain historically low and present buyers with extremely favourable financing so the time to act is now, because  as global recovery regains its footing, rates will likely rise to keep inflation in check, resulting in a higher monthly housing payment for homebuyers.

 

Housing Market

Home Sales
in thousands

Resale housing activity ticked up slightly by 1.4%, although still falling in line with long term averages—this is the highest level of sales since January. Although it largely reflects a gain over the weakened activity one year ago, this marks the fifth time since April 2010 that sales were up year-over-year. Moving forward, sales are expected to remain stable.


 

Average Home Price
in thousands

The average home price in October stood at $362,899—up 2.9% from last month, and up 5.5% over last year. Earlier this year, elevated sales of higher-end homes skewed the national average price higher. The drop in average price, compared to earlier this year, is more a result of sales in the most expensive markets coming back in line with normal levels, rather than a depreciation of overall home values. This should have a minimal, if any, effect on buyers and sellers.

 

Inventory
Sales-to-Listings Ratio

The national housing market remained balanced in October, and marked six consecutive months of sales-to-new listings ratio between 52-53%. 60% of local markets were balanced. Of the remaining 40% of local markets, more were in seller’s markets than buyer’s markets. Balanced inventory indicates a greater likelihood of a steady and stable market in the coming months, which is a good sign for the housing market moving forward.

 

Mortgage Rates

Low interest rates and stabilizing home prices are bringing home ownership within reach for an increasing number of Canadians. When widespread global recovery gains a stronger footing, rates are expected to increase to keep inflation near the 2% target. The Bank of Canada has lost urgency for additional rate hikes, given the increasing concerns over debt levels in Europe and weakening economic indicators in the United States. The low rates offer increased affordability for home buyers.

 

                             

Sources: Conference Board, The Canadian Real Estate Association (CREA), Royal Bank of Canada, Canadian Mortgage and Housing Corporation, Bank of Canada. 

Special Reports

 

When first-time home buyers decide they are ready to buy, it is important for them to begin the process by carefully assessing their values, wants, and needs—both for the short and long term. This is a critical step since consultation sessions normally start with the buyers’ values. Afterward, buyers can explore their wants and needs and, once defined, determine actual criteria.

A recent study shows how important the following home-buying factors were to buyers:

    • List Price: 72%
    • Location: 69%
    • Neighbourhood: 55%
    • Floor Plan: 37%
    • Square Footage: 28%
    • Schools: 22%

By having the home-buying criteria in mind before walking into a consultation, buyers are off to a better start when meeting with their real estate sales professional. The consultation allows buyers to fill in any missing gaps within their values, wants, and needs.

 

 

 

Contact me,
your local real estate expert, for information about what's going on in our area.

 

Don't forget to check out this month's video:

 

 
 
For a report with additional graphs, please see the This Month in Real Estate PowerPoint Report. 
The opinions expressed in This Month in Real Estate are intended to supplement opinions on real estate expressed by local and national media, local real estate agents and other expert sources.  You should not treat any opinion expressed on This Month in Real Estate as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of opinion.  Keller Williams Realty, Inc., does not guarantee and is not responsible for the accuracy or completeness of information, and provides said information without warranties of any kind.  All information presented herein is intended and should be used for educational purposes only.  Nothing herein should be construed as investment advice.  You should always conduct your own research and due diligence and obtain professional advice before making any investment decision.  All investments involve some degree of risk.  Keller Williams Realty, Inc., will not be liable for any loss or damage caused by your reliance on information contained in This Month in Real Estate.