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Real Estate News: January home prices up 19%

February 19, 2010

Source: (CBC News)

The number of home sales declined 2.8 per cent in January compared with the near record level in December, the Canadian Real Estate Association said Wednesday.

Ontario accounted for about half the national decline, but activity was also down in British Columbia, Alberta, and Manitoba. Conversely, home sales reached new heights in Quebec, the association said.

Year over year, home sales were 58 per cent higher in January 2010 than they were in the same month last year, when housing activity reached the lowest level in a decade during the depths of the recession.

“Because activity began recovering in February last year, large year-over-year gains are expected to shrink over upcoming months,” the real estate group said in a release.

The average price of all homes sold through the body’s online Multiple Listings Service in January 2010 was $328,537, up 19.6 per cent from one year ago. In January 2009, the average Canadian home price hit its lowest level in three years.

Inventory levels continue to be depressed, which is contributing to the price gains. Strong demand for resale homes continues to draw down supply. There were 170,199 homes listed for sale on MLS in Canada at the end of January 2010, a decline of 18 per cent from levels reported for the same month in 2009.

Market cooling?

“January results suggest that the national resale housing market may be past the recent peak,” said Gregory Klump, chief economist of the Canadian Real Estate Association.

“[Inventory levels] are still planted firmly in sellers’ territory, but moving in the right direction for buyers,” he said.

The advent of the HST in Ontario and B.C., coupled with widely expected interest rate hikes and new mortgage insurance rules outlined by Finance Minister Jim Flaherty on Tuesday will all combine to cool off the housing market later in 2010, he predicted.

Read the complete article “January home prices up 19% for year” from CBC News. (Feburary 17, 2010)

My commentary:  I’ve been keeping a close eye on the Oakville and Mississauga real estate markets since January.  There’s no question, prices are up considerably – people are buying and the number of available listings is still quite low.  No, we’re not at the ghost town levels of January ’09, but the demand is by far outweighing the supply as I write this.

I’ll give you an example to illustrate:  Last January I helped one of my clients by a home in Oakville.  The asking price had been reduced a few times as the Sellers at the time had already bought another home late in ’08.  As a result, my clients purchased the home for under $500,000 almost 11% below the original asking price for the home.  As a comparison, a comparable property just sold in the same neighbourhood this month  for over $600,000.  I don’t think I need to do the math for you there…

The reality is that we are in a Sellers market, but those Sellers and those Buyers are realizing that despite the rising prices and returns they see on their existing home, unless they choose to wait and rent, they will be faced with the same prices more or less when buying another home.

Is the market cooling? Truthfully, I hope so and YES you heard me right – I am a real estate broker who’s hoping for things to cool off. Why? because I’ve been a real estate broker for a long time and I would like to continue to grow my business, not take the money and run. I still have many clients looking to buy a home in Oakville and Mississauga, but the difference now is they are listening to my advice and buying with caution rather than emotion.

Ryan Chelak is a real estate broker in Oakville & Mississauga and longtime Oakville resident. Subscribe to my blog to keep up to date on local news, information, events and of course everything you want to know about Oakville & Mississauga real estate.

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