Exceptionally low interest rates, government incentives (rebates, tax breaks and RRSP contributions), the looming HST and a renewed consumer confidence puts Canada as the world leader when it comes to the recovery of the global real estate market.
In a recent report on Global Real Estate Trends written by Adrienne Warren of Scotiabank, Canada is leading the way in the global real estate recovery with positive growth in housing starts, housing sales and average prices. Prices in Canada remain strong due to the increased demand for housing, coupled with low levels of housing inventory. First time buyers are out in full force keeping the demand high, but those in a position to move up the property ladder are deciding to hold contributing to an imbalance in supply and demand.
Many sellers may be waiting until the spring to list their homes in hopes of an increase in sale prices when more buyers come to the market. With the HST being introduced in July and rising interest rates, it is unclear if the demand will remain at these levels.
Last year ended stronger than expected for Canadian real estate and shed some hope for the industry and the Canadian economy as a whole. Many in the real estate industry predicted that 2009 would continue to post a decline in both units sold and average prices. MLS sales for 2009, however, were reported at approximately 465,000 which represents a 7% increase over 2008 and the average housing price was listed at $315,000 representing a 4% increase. This may seem small, but it is not insignificant. Coming out of this global economic downturn, Canada has posted the highest average housing price of any country in the developed world!
This drastic turnaround can be attributed to buyers regaining confidence in the market, low lending rates, the anticipation that those rates may soon start to rise, as well as the number of government incentives that have been offered to buyers to bring them back to the marketplace. Now with the HST set for a July launch, many buyers also are hoping to get in early to avoid that extra expense. This strong demand for housing with relatively small supply has kept an upward pressure on prices resulting in the strongest seller’s market since 2002.
If you wonder when the supply/demand will begin to shift again, look no further than the interest rates. With prices remaining high and interest rates on the rise, we will inevitably begin to see a reduced affordability in housing and an eventual cooling of this seller’s market.
Sean Kavanagh, Sales Representative, was the winner of the third Annual Rookie of the Year Award for CENTURY 21 Miller Real Estate. The announcement was made at the company’s Christmas Lunch on Friday, December 18, 2009. Broker of Record Bill Miller presented Sean with the trophy.
The Rookie of the Year Award
The objective of this award is to recognize a new salesperson who has not only made a great start on their career, but also best personifies the spirit of our office team.
- Hard working
- Regular attendee at training and development sessions
- Regularly participates in sales meetings
- Supports fundraising and social events
- Helpful and co-operative
- Exhibits a cheerful, positive, can-do approach that is an inspiration to other new people
Nominees for the award are put forward by fellow salespeople: the winner is the person who receives the most votes from their peers.
Canada and more specifically Ontario appears to have avoided any lasting impact from the collapse of the US housing market and the subprime mortgage market meltdown. What we have seen over the past 18 months was fear versus demand and fair market values relative to the true economic environment in Ontario. From the price stability we have seen, I would say we are on great footing going forward.
The rational for Ontario home price appreciation in 2010 is as follows:
Ontario home prices are fairly valued. Despite a healthy appreciation in home prices in Ontario between 2001-2009 we have avoided the huge run ups (and drops) in prices seen in Alberta and British Columbia.
Ontario’s housing supply appears to be inline or undersupplied versus the demand.
The unemployment rate in Ontario rose sharply as a result of the US economic collapse. However, it has since started to slowly decline. The unemployment rate currently sits around 8.5%, it averaged around 6.2% during the 36 months of 2006-2008.
Ontario continues to have a net gain in population growth. It is estimated that the population of Ontario will grow between 6% and 10% over the next 21 years. This will have a longer lasting and direct impact on both the demand for housing as well as the economic activity in the area.
Improving consumer confidence and record low interest rates are bound to have a positive impact on the spring 2010 housing market. The spring housing market may even be exaggerated by the Bank of Canada’s signalling of their intention to raise interest rates in June and the introduction of the HST on new home purchases in July.
Where prices go beyond the summer of 2010 will really depend on how much and how quickly the bank of Canada intends on raising rates.
For more information on buying or selling real estate in Burlington, Hamilton, Oakville, or Toronto Ontario, or if you have questions about current market trends, mortgages or interest rate information, please visit the Sean Kavanagh Real Estate Resource Centre at www.seankavanagh.ca I’d be happy to answer any questions to accommodate all of your real estate needs. Follow me on TWITTER or FACEBOOK! You can also contact me at 905-220-9198.
I look forward to hearing from you!
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Source – USPRWire