In my daily travels, I'm often asked "How's the market?". I'm happy to report at the end of June 2010 that we have a "good" residential market in Kitchener and Waterloo. The first 4 weeks of June saw 442 MLS sales in K-W versus 525 in June 2009. Now those seeking sensational headlines might lead with "K-W home sales decline 16%" and they'd be right. However, a closer look suggests that June 2009 was a "great" month and our market currently rates as "good".
So what's good about it? Successful sellers in June saw their home on the market for just 33 days on average versus 52 last year. The average price of residential homes sold on MLS in June was $292,366 versus $260,217 in June of last year. For those keeping track, that's a 12% increase year-over-year. The average list price to sale price in June 2010 was 97.8% while last year it was 98.3%. Inventory of MLS homes for sale in K-W currently sits at 1353. Of those, 1022 are resale homes and 331 are new construction(in many cases unbuilt). With less than a 3 month supply of resale homes, the market remains firmly in seller's territory.
Since we're near the end of the first half of the year, it might be instructive to look at MLS sale numbers year-to-date. To June 28, 2010 there have been 2689 residential sales versus 2436 for the same period in '09. That amounts to a 10% increase.
So where do we go from here? It appears the shift in CMHC policy has had the desired effect of dampening sales. In particular, the change requiring investors to have a 20% downpayment rather than 5% has left many on the sidelines. Affordability has suffered with higher interest rates and higher prices. The Harmonized Sales Tax takes effect July 1, 2010 in Ontario which certainly moved some demand forward and may result in weaker sales for the balance of the year. Two things bear watching...inventory levels and interest rates. Increases in either will see the market shift to a balanced market and significant increases may even lead to a buyer's market. Stay tuned as it's sure to be interesting.
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