Housing inventory down

I've mentioned this before, but here is a recently published report.

Old news, but important news

It is now going to get harder to buy your first home. The government has recently decided that lending rules must get tighter, so that when, not if, interest rates go up, we will not have a real estate crash similar to something that occurred in the US recently. I think it's a solid proactive move that will help the Canadian economy in the future.

The new qualifications are based on a 5 year fixed term mortgage. In the past, the lending rules were more lenient in that a person would be able to qualify for a mortgage with something less than the 5 year fixed term standard. When interest rates have been at a historic low, this is not an issue. This only becomes an issue when interest rates begin to go up, and that is the only way for them to go.

Some people in the real estate business may not like this news. It means that there might be a few less buyers out there for some properties. The extra buyers are not worth the risk that this presents to our economy. First, there is currently an inventory shortage in many cities across Canada, leading to historically high home prices as there are more buyers than sellers. Thus, I don't expect that this rule change will alter home prices all that much. This can be good news. It means that homes remain affordable.

The second issue is the fact that those who will face trouble when interest rates go up will be fewer in numbers. This means less people liquidating their properties in a mad rush. This will keep home prices stable when interest rates do eventually go up.

A Great Start to 2010 for Ottawa’s Housing Market

From the Ottawa Real Estate Board

""Members of the Ottawa Real Estate Board sold 713 residential properties in January through the Board’s Multiple Listing Service® system compared with 529 in January 2009, an increase of 34.8 per cent.

Of those sales, 156 were in the condominium property class, while 557 were in the residential property class. The condominium property class includes any property, regardless of style (i.e. detached, semi-detached, apartment, stacked etc.) which is registered as a condominium, as well as properties which are co-operatives, life leases and timeshares. The residential property class includes all other residential properties.

“These numbers are more in line with what we might expect for a typical January, whereas 2009 started off abnormally slow due to uncertain financial and market conditions worldwide,” said Board President Pierre de Varennes. “Although listing inventory remains low, we expect that will change as we head into the spring market and interest rates remain low,” he added.

The average sale price of residential properties, including condominiums, sold in January in the Ottawa area was $320,966, an increase of 11.4 per cent over January 2009. The average sale price for a condominium-class property was $259,273, an increase of 22.5 per cent over January 2009. The average sale price of a residential-class property was $338,244, an increase of 8.2 per cent over January 2009. The Board cautions that average sale price information can be useful in establishing trends over time but should not be used as an indicator that specific properties have increased or decreased in value. The average sale price is calculated based on the total dollar volume of all properties sold."

“A Great Start to 2010 for Ottawa's Housing Market”. http://www.ottawarealestate.org/news_release.shtml (9 February, 2010)

Groundhog day!

This may sound strange, but "groundhog day" is one of my favourite movies. Each year, I try to watch some TV rerun, so I can enjoy it. In a way, it reminds me to keep things fresh. I don't want to ever live the same day, over, and over, and over again. I think it's a lesson that we sometimes need to be reminded of when we are stuck in the 9 to 5 rat race. There are little things you can do each day to make each day special.

Anyways, that's enough for my emotional reflection of an old movie. I want to talk some real estate.

I think today, if you've been thinking about moving, is a great day to start to plan it. It's still a little cold to move, but there is a lot of planning that needs to be considered. You might want to take advantage of making an RRSP contribution before the March 1 deadline. Under the home buyer's plan, this can significantly influence whether or not you are able to buy this year or next. It's important to start to ask the questions now.

The next thing is that interest rates are still at historically low levels. Why not take advantage of that if you can? Home-ownership will only likely be more expensive in the future with any rise in the prime rate.

If you are looking at moving in the spring, you should find out how much prices are going up now. Inventory of homes in certain areas is low, it may be a hard time to find something to buy without the proper strategy. You should contact me to know whether or not it is a good time for you to sell your property. There are many, many things to consider.

Again, I remind everyone to continue to try to get some referrals for me. Whether or not you are interested in a condo, investment property, single-family home, new, old, or you are just curious about real estate, let's talk! Real estate is an interesting business, and you should know some of the basic ins and outs. For most people, it is the single largest investment that they make in their lives. You should work with a professional.