The national housing market remains strong and steady, despite continued discussion of weakening economies in Europe. The increased concern about global financial market volatility in the news doesn’t appear to have softened home buyers’ enthusiasm.
Gregory Klump, CREA chief economist, elaborates, “The Canadian housing market is proving resilient in the face of ongoing economic and financial uncertainty, to the benefit of Canadian economic growth.” Gross domestic product (GDP), a measure of economic growth, was stable from the previous month and up 2.7% from the previous year. Economists predict GDP for 2011 will come in at a healthy 1%-2% growth. The housing market and economy impact each other for better or for worse, and currently it falls in the “for better” category.
A well-balanced housing market provides a level playing field with opportunities for both buyers and sellers. Interest rates remain historically low and present buyers with extremely favourable financing. 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 home buyers.
Resale housing activity ticked up slightly by 2.6%, and still falls in line with long-term averages. Although it largely reflects a gain over the weakened activity the previous year, this marks the sixth time since April 2010 that sales were up year-over-year. Moving forward, sales are expected to remain stable.
Average Home Price
The average home price in November stood at $360,396—up 4.6% from 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.
The national housing market remained balanced in November. After marked seven consecutive months of a sales-to-new listings ratio between 52%-53%, it moved up to 56% — signaling a possible drift toward a seller’s market. Half of local markets were balanced and a third were in sellers markets. The overall picture remains balanced and that indicates a greater likelihood of steadiness and stability in the coming months, which is a good sign for the housing market moving forward.
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.
If one of your New Year’s resolutions is to sell your home, here are a few things to keep in mind:
Although the traditional home-buying season starts in the spring, here are some reasons why listing your home now, rather than waiting, could prove to be a smart decision.
Even if you’re not ready quite yet, now is a great time to start the conversation with your local real estate agent. He or she can give you pointers on which repairs and preparations to tackle first, and which ones may not be necessary, saving you time and money. Starting now can help you capture the most buyers by busy season.
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