March 2012 Market Update

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Commentary

The national housing market remains strong and steady and is expected to stay on a stable course in the midterm.

At the same time, Bank of Canada Review expressed concerns about the level of household debt that Canadian households have taken on in the past decade. When home prices rise, homeowners feel wealthier and are more likely to spend more than they would otherwise. Although this poses additional risk when tough times hit, the Bank does not see home prices as at risk for substantial correction in the face of “adverse economic disruptions," as so many other countries have experienced over recent years. The government has taken measures to slowly deflate any semblance of a bubble over the past several years through increased regulation, such as lowering the maximum amortization term for a mortgage from 35 to 30 years.

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 homeowners.

 

Housing Market

Home Sales
in thousands

Resale housing activity was down 4.5% month-over-month. Although this marks the end of seven consecutive months that sales were up, the increases have been slow, steady, and positive, as shown by the slight incline on the virtually straight line from May through December. The stable number of sales is a continued sign of strong fundamentals.

 

Average Home Price
in thousands

The average home price in January stood at $348,000—about where it was this time last year. During the first half of 2011, elevated sales of higher-end homes skewed the national average price higher. The Canadian Real Estate Association (CREA) has recently created an index that will minimize the impact of such factors, showing a price metric that accounts for several factors in addition to seasonality. This should have a minimal, if any, effect on buyers and sellers.

 

 

 

Inventory
Sales-to-Listings Ratio

The national housing market remained balanced in January. After seven consecutive months of a sales-to-new listings ratio between 52%–53%, it rose slightly over recent months. The overall picture remains balanced and indicates a greater likelihood of stability in the coming months—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. For now, 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

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

1. Organizing and cleaning are crucial when prepping a home for sale. Potential homebuyers have a more positive reaction to a home that is clutter-free and that gives them the feeling it 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 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 poor first impression can cloud their entire opinion about the home.

 

 

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.

 

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