The Lack of Supply and the Strength of Market Demand here in Ottawa has the market hopping.
Each Morning when I open my MLS program I take a look at the number of houses listed yesterday along with those back on the market and compare it to the the number of conditional sales and firmed sales. For the past few weeks the number has been just about exactly the same. Now usually at this time of year the number of listings available starts to climb and it takes a several months for it to come back down to even. This year with the demand from buyers high due to historically low interest rate, the threat of the increase in overall costs to buy due to HST, and good news of the stronger economy and the lack of sellers willing to put there homes on the market we have a shortage.
A shortage that is driving the prices higher and higher especially in the condominium townhome category. Home styles that were selling this time last year at $149,900. are being listed for $179,900. and selling for more. I have seen one in particular, in a bidding war, sold for $10,000. over the asking price. Many are not risking putting their homes for sale until they find something they like to move in to.
Will it change? Not likely as there are no new developments catering to under $225,000. The wait for anything new to be built is over a one year, if they can sell you anything at all. For instance, Mattamy Homes in Fairwinds has had to close their doors because they can not be assured of permits for construction [see Kanata EMC Friday March 26, 2010 www.EMCKanata.ca for more details] Monarch Homes in Stonebridge have nothing they are awaiting a new release, as is Tamarack and the new Tarion rules hold builders responsible for delays so that is not a favourable climate to sell new homes.
Maybe the demand might slack off a bit next month when the new mortgage rules [see www.torontosun.com/money/2010/03/02/13083876.html ] requires families to qualify at slightly higher rates (at the 5 year posted rate versus the 3 year) which in most financial circles will do very little to change folks purchasing ability or investors to put in more of their own cash (20% versus 10% to one 1st mortgage) but secondary financing will just come back into play then rents will have to go higher to pay for this financing which in turn will motivate more renters to jump into purchasing. None of this will sate the demand as these people need to live somewhere. This all looks to support a continued high demand market and no increase in supply.
All I can say is stay tuned the only thing guarenteed is CHANGE.