Despite transitory effects from regulatory changes in the mortgage markets, the housing market’s balanced position remains firm. Sales activity is up 38% from the recessionary low of December 2008, while average home prices continue to be skewed upward by a regulation-induced surge of multi-million dollar home sales in some of Canada’s priciest and most active markets.
Canada’s first-quarter economic growth accelerated to the fastest pace in a year. The economy expanded at a 3.9% annualized pace from January through March after a previous 3.1% expansion. Much of the gain can be attributed to businesses that are leading the recovery by investing to regain competitiveness after years of stagnant productivity growth. On a monthly basis, gross domestic product rose 0.3% in March, faster than the 0.2% forecasted. More robust growth also came as the country’s currency traded above parity with the U.S. dollar for most of the past three months. While strong fundamentals and a solid banking system continue to bode well for Canada, drop-off in consumer and government spending and a host of developments outside of Canada continue to be cause for concerns.
Meanwhile, improved affordability, balanced markets, and low mortgage rates are proving favorable to both buyers and sellers.
Sale Stats for the Kitchener Waterloo Board
May 2011 669 May 2010 638 May 2009 691
Apr 2011 616 Apr 2010 717 Apr 2009 626
Mar 2011 608 Mar 2010 719 Mar 2009 487
Feb 2011 491 Feb 2010 526 Feb 2009 359
Solds Year to date :
2007 - 2975
2008 - 2782
2009 - 2410
2010 - 3000
2011 - 2766
Inventory
Sales-to-Listings Ratio
The national housing market moved further into balanced territory in April, as illustrated by the sales-to-new listings ratio. More than two-thirds of local markets in Canada were balanced in April with almost half of the remainder classified as sellers’ markets. The months’ supply of homes on the market remained stable and is currently at 6 months compared to 5.7 months in March. Balanced inventory is a good sign for the housing market moving forward.
Home Sales
Resale housing activity was down 4.4% in April compared to a month ago, continuing to reflect changes to mortgage regulations that went into effect in March. As expected, declines were largest in some of Canada’s priciest and most active markets such as Toronto and Vancouver. The effects could prove transitory as seen last April when the impending tightening of mortgage rules, speculation about higher interest rates and the imminent introduction of the HST in some provinces some sales activity forward.
Average Home Price
The average home price in April stood at $372,544—up 8% from a year ago. April marked the third consecutive month in which the national average price was up by 8% from year-ago levels. Home prices continued to be skewed upward by the surging multi-million dollar property sales in selected areas of Greater Vancouver
Mortgage Rates
Low interest rates and stabilizing home prices continue to keep homeownership within reach for an increasing number of Canadians. As widespread global recovery gains stronger footing, rates are expected to increase to keep inflation in check near the 2% target. In fact, rates have already started to come back up to last year’s level from record lows in December and January.
Special Report
Repeat buyers, especially move-up buyers, tend to want their next home to be in great condition. Usually when homes are located in a neighborhood that attracts move-up buyers, homes need to be in pristine condition to stand out from the rest. This can be achieved by getting the home pre-inspected for the buyer. Research shows that 8% of sellers have a prelisting inspection before setting home on the market.
It is fundamental for sellers to make essential repairs to their homes before listing, and curb appeal is particularly important. This is often a first step to getting buyers in the door. Boosting the curb appeal tends to result in more offers and faster sales.
