Brisk national home slaes reflect mortgage changes coming in March

The Canadian Real Estate Association says a 4.5 per cent rise in home sales in January over month earlier reflects Ottawa's announcement to change the allowed amortization period on government-insured mortgages from 35 to 30 years.

CREA is suggesting that buyers are rushing their home purchases in anticipation of the rule change that takes effect on March 18th.

"We anticipated the recent announcment of tighter mortgage regulations ... would pull forward sales activity in the first quarter of 2011, particularly in some of Canada's more expensive housing markets," said Gregory Klump, CREA's chief economist.

Locally, January sales were also brisk, according to Winnipeg REALTORS president Ralph Fyfe.  In January, a new dollar volume sales record was set for the month.  Last month, dollar volume sales jumped 22 per cent to $124.5 million, while MLS sales went up 16 per cent to 566 units when compared to the same month in 2010.

But Fyfe said the sales and dollar volume jump was due to other factors rather than the mortgage changes announced by federal Finance Minister Jim Flaherty.

"Jobs, immigration and low interest rates continue to keep our local MLS market active," said Fyfe.

"Given the strength of our local market, it is not as cyclical as it used to be and there is less concern and less hesitation to put properties on the market early in the year."

"The tightening of the mortgage regulation has only a small impact on the market," Fyfe added, "as local home bueyrs are now amortizing their mortgages for 25 and 30 year periods, anyway."

CREA wants the federal govenment to wait before making further mortgage changes.

"It will take some time before the longer-term impact of the latest mortgage regulations on the houseing market can be known," said CREA president Georges Pahud.

"For that reason, further action shouldn't be taken until the impact can be measured.

"In the meaintime, if last year can be used as a guide, sales activity may heat  up further as we get closer to the date on which tighter mortgage regulations come into effect, especially in some of Canada's pricier markets

"That said, local housing market trends often diverge from national trends, so buyers and sellers should consult with their local REALTOR to understand how the market is shoping up where they live," he added. 

Fyfe said there were more listing in January, offering more chioce to buyers

"Proof of a more balanced market was the ration of total sales price dollar vlaue to toal listings price value dropping under 100 per cent," he added.

A more heated market with plenty of multiple offers will push the ration above the 100 per cent level.

In January, residential-detached homes selling above list price decreased from 35 per cent to 31 per cent when compared to the same month last year.

For condos, the drop was from 24 percent to 10 percent selling aboe list price, but this was likely attributed to the large gaines in "at list price" sales when compared to the same month in 2010.

The majority of residential-detached and condo sales in January were under list price.There are still a number of MLS areas and high-sought after price ranges where sales of existin ginventory and new listings are quickly being depleted, which drives up home prices in these areas, Fyfe added.

WREN, February 18, 2011 Edition

 

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