March 2011

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Commentary

The housing market continues on a stable and balanced track. Sales activity is nearly 50% above the recessionary low of December 2008 and only 11% below the recovery high of December 2009. Home sales rose while prices remain on par with the previous month. 

According to the Bank of Canada, the economy is picking up steam faster than anticipated. Late 2010 proved to be significantly stronger than expected, with consumers continuing to be a key component. A 17% jump in exports was the fastest-paced increase in more than five years. The strong currency is a potential concern as it makes importing Canadian exports more expensive for other countries. This metric will be closely monitored by economists and the Bank of Canada alike.

Moving forward, rising interest rates and weak job growth are factors that are responsible for keeping sales activity and price appreciation stable and slower than seen during the recovery. Mortgage regulation changes will likely spur upward momentum in home sales during the first quarter. Due to improved affordability, balanced markets, and record-low mortgage rates, there are ample opportunities for both buyers and sellers.

Housing Market

Home Sales

in thousands

Resale housing activity increased 4.5% in January from December. Home sales have improved steadily since mid-2010, gaining 24% from the low in July.  Sales have now reached the highest level since April. Historically low interest rates and a rush to buy before another round of mortgage-regulation tightening takes effect, particularly in the most expensive markets, will continue to support the market in the first quarter of 2011.

Average Home Price

in thousands

The average home price in December was $343,675 – up 4.6% from a year ago and essentially unchanged since October. Prices rose or were stable in two-thirds of all markets on a year-over-year basis. Price stability is likely to continue as new listings pick up and interest rates are expected to increase.

Inventory

Sales-to-Listings Ratio

The national housing market remained in balanced territory in January. The number of new listings rose by 4% – the biggest increase since May 2010. An expected increase in new listings in the spring and rising interest rates are likely to return many local area seller’s markets into balanced territory and further stabilize home prices.

Mortgage Rates

Low interest rates and stabilizing home prices continue to open up homeownership to an increasing number of Canadians. As widespread global recovery gains further footing, rates will increase to combat inflation and keep it near the 2% target. In fact, rates already have come back up to last year’s level from record lows in December and January.

Sources: Conference Board, The Canadian Real Estate Association (CREA), Royal Bank of Canada, Canadian Mortgage and Housing Corporation, Bank of Canada.  Home Sales for Jan released Feb 15.

Special Reports

Preparing to Sell

Preparing your home for sale can seem daunting, but these five tips will help you get the best price in the least amount of time.

1. Organizing and Cleaning is crucial when prepping a home for sale. Potential homebuyers have a more positive reaction to homes that are clutter-free and give them the feeling that the home is “move-in ready.”

2. Determine replacement estimates before listing your home, even if you are not planning on making the replacements yourself. This information can help buyers to make informed decisions.

3. Have your warranties ready-especially for home appliances that will stay with the home after the sale.

4. Curb appeal is a crucial factor because it determines first impressions. A negative first impression can cloud their entire opinion about the home.

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

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