Irrational Exuberance?

The Kitchener-Waterloo Real Estate Board reports 527 residential sales in K-W for May 2009 representing a 9% increase over May 2008 sales.  The average price declined year-over-year by 1.4% to $261,628.  Right about now you're probably thinking "What about the Recession?"  This increase in sales is being driven by low interest rates resulting in increased affordability.  Over 3/4 of sales were under $300,000 indicating a large number of first-time buyers active in the market.  Detached homes accounted for 68% of sales in May '09 versus 63% in May '08 showing the effect of low interest rates.  Sellers of detached homes under $300,000 reassumed control of the market with a decline in active listings of 6% year-over-year.

So where do we go from here?  I anticipate June sales will show similar results and the summer months will bring about a pause in the heightened activity.  My next post will be devoted to the effect of interest rates on affordability and what the future might hold.    

Jeff Gingerich

Jeff Gingerich

Sales Representative
CENTURY 21 Heritage House Ltd., Brokerage*
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