Real Estate Market Trends – September 2009
The Bank of Canada announced Yesterday that it will leave its key interest rate unchanged and restated its commitment to holding this rate steady until mid-2010, conditional on the outlook for inflation. In its statement the Bank declared that “recent indicators point to the start of recovery in major economies, supported by aggressive policy stimulus and the stabilization of global financial markets.”
Lenders are expected to keep their prime lending rate steady. However, in recent weeks the pricing of new variable-rate mortgages in relation to the prime rate has improved. You can get as low as 2.45% Variable rate Mortgage.
While pricing for fixed-rate mortgages is not directly affected by today’s announcement, rates on certain fixed products have been declining recently. You can get as low as 3.29% 3 Years Fixed Mortgage rate.
Housing starts in Canada are expected to rebound in the second half of 2009 and will reach 141,900 for the year. Starts will increase to 150,300 for 2010, according to the Canada Mortgage and Housing Corporation (CMHC). The average MLS® price is expected to moderate to $301,400 in 2009 and to increase to $306,300 in 2010.
The RE/MAX Return on Investment Report found that 11 (17 per cent) of the 65 Toronto Real Estate Board (TREB) districts reported an upswing in the value of a single-detached home in the first six months of 2009, despite one of the worst first quarters on record. Given their more affordable price point, condominium properties fared slightly better than single-detached homes, with 13 (22 per cent) of 59 TREB districts posting an increase in average price.
"Economic uncertainty and lower levels of employment tempered new housing construction in the first half of this year", said Bob Dugan, Chief Economist for CMHC. "In the second half of 2009 and in 2010, we expect housing markets across Canada to strengthen."
Purchasers clearly moved to take advantage of greater affordability in the marketplace in the first half of the year. Prices were down in virtually every neighborhood surveyed; supply of homes listed for sale was at an all-time high; and interest rates were at historic levels. If you’re a buyer, it doesn’t get much better than that. “Acting fast” is the way to go right now, more delay only means more expensive and reduced affordability.
The momentum going forward is expected to be healthy – buoyed by positive economic data and a return to stability in the financial sector. There may be some bumps along the road, but all in all, the worst is over for the residential real estate in the Greater Toronto Area.