The surge in power of sale activity witnessed in Kitchener Waterloo in June carried over to July. The Kitchener-Waterloo MLS reported 13 residential sales in July matching the 13 recorded in June. The sales totals for these months represents the highest number of power of sales for any month in 2010. Totals for January to May ranged from 8-12 so perhaps this isn't as alarming as it might appear. However, the average list price to sale price ratio for July power of sales plunged to 95%. Lenders recognized that appraisal values from the "hot" spring market were no longer valid and chose to accept considerably less than the 98-99% average list to sale price we've seen for much of 2010.
The house pictured above is in the Columbia Forest subdivision in Waterloo. It is currently listed under power of sale on MLS for $565,000 after a reduction from $580,000. A property history search reveals that it sold in June, 2008 for $575,000. The new owner subsequently tried to sell for $599,900 prior to the TD bank taking possession. Stay tuned to see how this turns out.
As predicted in this blog some months ago, power of sale inventory levels have increased significantly. On August 15th, there were 20 residential MLS listings under power of sale in Kitchener-Waterloo representing only a slight increase from the 18 in June. However, this is a 400% increase over the 5 in January and a 200% increase over May's total of 10.
What can we expect in the months to come? It appears that interest rate increases in Canada will be put on hold which is good news for borrowers. I expect local employment to moderate led by manufacturing and new home construction job losses due to feverish competition and the introduction of the Harmonized Sales Tax respectively. In short, look for power of sale activity to continue to trend higher as an increasing number of borrowers struggle to pay the mortgage. Patient buyers will see better affordability in the coming months with lower prices and low interest rates.
As always, for sound advice on your real estate needs, feel free to call/email 519-505-4488 firstname.lastname@example.org
Century 21 Home Realty Inc. Brokerage