Sellers can take advantage of financial headwinds outside Canada
Soon we will all be adjusting our clocks and getting ready for the change in time for the change in seasons. My mom always used to say: “We spring forward and fall backward” as we adjust out clocks.
Well, the real estate market is not much different. The summer has been quiet, but now that the fall is here sales activity “heats up” prior to Christmas.
In August 2011, the total number of new listings that hit the market in the greater Montreal area increased over July 2011. The same pattern was displayed in 2010. Generally, this increase in new listings, near the end of summer, demonstrates the end of the slow season and the beginning of the rise in the fall season. And as with any market slowdown, the time to sell a property increases. The average sale transaction in the summer took seven per cent longer to complete than in the later part of the winter, which is normal.
What is different about the 2011 real estate market compared with 2010 is the data for new listings, sale transactions and the number of active listings on the market. There was a 6.8-per-cent increase in the number of new listings between September 2010 and August 2011, but the number of sale transactions was 5.4 per cent lower; thus, the number of active listings on the market (all categories of properties) grew by 12.5 per cent.
Overall, there have been more active listings for buyers to choose from and thus, competition has risen.
During this year’s “slow season,” there has been an increase in the number of sale transactions over last year. Previous months (September to May) demonstrated the opposite, where the number of sale transactions was lower in 2011 vs. 2010. This is good news for owners who are looking to put their property on the market in the fall.
These new numbers demonstrate that the market is still, overall, a seller’s market in the greater Montreal area. Reinforcing this conclusion is the fact that the average price per transaction actually increased, by 6.7 per cent. However, sellers should be aware that for the past year the relative number of listings on the market is slowly increasing and understand the market in their neighbourhood.
It is expected that more new listings will hit the market in the fall and the relative number of sale transactions may not offset the competitive aspect of the market. Taking advantage of two traditional sale peaks (fall and winter) would better guarantee sale success as opposed to waiting for the winter season alone after the New Year. If more competition is expected, then what is the point in waiting for it to come as opposed to trying now when competition is less.
And for buyers, what should be of importance is that interest rates remain low, which makes qualifying for mortgages in a seller’s market attainable.
“The housing market in Canada remained on a firm footing in August when compared to volatile financial markets,” said Gary Morse, president of the Canadian Real Estate Association (CREA). “Through their actions, homebuyers are showing that they remain confident about the stability of the Canadian housing market, and recognize that the continuation of low interest rates represents an excellent opportunity to buy their first home or trade up.”
Interest rates will probably remain suppressed for some time.
“Once again, economic and financial market headwinds outside Canada are keeping interest rates lower for longer,” said Gregory Klump, CREA’s chief economist. “Those headwinds will likely persist until, and indeed after, fiscal quagmires in the U.S. and Europe are resolved.
In the meantime, the Bank of Canada will have ample reason to delay raising interest rates further, which is supportive for the Canadian housing market.” Buyers should be prepared to pay more for property in the months and year to come. firstname.lastname@example.org