To me, urgency is part of the the appeal of the NCAA basketball tournament known as March Madness. It's win or go home. It appears buyers adopted this attitude in March as MLS sales activity in Kitchener-Waterloo saw year-over-year increases of 9% in average price and 38% in unit sales. March unit sales in K-W totalled 546 besting the 507 sales in March 2007. Sellers were receiving, on average, 98.5% of their asking price and the average days on the market was just 33. The average price of a property sold in March was $280,646 and the average price of a detached home was a lofty $333,965.
What are the drivers for this level of activity? The number of properties for sale continues to be quite low with just 994 active MLS properties versus 1467 at this time last year. Investors are anxious to buy with 5% down before the Canada Mortgage and Housing Corporation(CMHC) policy changes take effect requiring 20% down. The combination of price increases and an uptick in mortgage interest rates have buyers worried about being priced out of the market and/or paying too high an interest rate. The current situation most parallels the rush to buy prior to the end of CMHC's $0 down and 40 year amortization policy in October 2008.
What advice would I offer? For sellers, jump in with both feet. Depending on your age, you may never see these prices again. For buyers, take a long-term view. If you have little equity, lock in your rate for 5 or more years. Make sure the property you're buying will suit your needs for at least the next 10 years.
My next post will deal with the assumption that real estate prices always go up. I'll detail the experience of a client who discovered otherwise. To quote George Bernard Shaw, "We are made wise not by the recollection of our past, but by the responsibility for our future."
Century 21 Home Realty Inc. Brokerage
560 Parkside Drive