Home buyers rushing into the market to take advantage of historically-low mortgage rates are driving MLS® sales and dollar volume upward, according to WinnipegREALTORS® president Claude Davis.
“More urgency has crept into our market in terms of people wanting to take advantage of more favourable financial conditions before rates start heading upward,” said Davis, “as has already occurred with longer fixed-term mortgages.”
March MLS® sales were up 23 per cent to 1,100 units, while dollar volume shot up 29 per cent to $241.1 million as compared to the same month last year.
Davis said MLS® sales rivaled the best March in 2007.
“Quite simply put,” he added, “March 2010 was a vast improvement over a poor March 2009, as well as head and shoulders above any March in terms of dollar volume.”
Helping drive dollar volume was the sale of a $1.5-million home and a monthly average price just shy of $240,000.
Statistics released by WinnipegREALTORS® showed southwest Winnipeg with an average house price of $303,000, the first time the area had eclipsed $300,000. Southeast Winnipeg had an average house price of $278,000 in March, while the municipalities in the capital region surrounding Winnipeg recorded an average house price of $252,000.
The lowest average house prices were in Winnipeg’s north and northwest at $185,000 and $188,000, respectively. The third lowest average house price was $217,000 in the northeast of the city.
By comparison, the average single-detached home price in Vancouver rose to just over a staggering $1 million, the highest by far in the nation. In Toronto, the average selling price is $434,696, while Calgary’s average is $471,245.
Winnipeg’s housing market is not subject to the extreme highs and lows experienced in other major Canadian centres. In fact, Canada Mortgage and Housing Corporation expects the city’s average house price to rise by just five per cent by the end of 2010.
WinnipegREALTORS® is on record saying that one month does not establish a market trend, adding that trends are only established locally over the long term.
The Bank of Canada is expected to raise interest rates in July in response to a better-than-expected economy and an overheated housing market possibly leading to increased inflation. In the meantime, the central bank has pledged to keep its rate at 0.25 per cent until July.
The nation's charter banks are not waiting for the central bank, as they have already raised rates charged on fixed five-year mortgages. Mortgage rates are tied to bond yields, which have climbed in recent weeks as investors anticipate rate increases.
The banks’ hikes are small, since they are the equivalent of just an extra $70 a month on a $200,000 five-year fixed mortgage.
Federal Finance Minister Michael Flaherty tightened rules in the country’s mortgage market on Febuary 16 to ensure buyers can afford their homes when interest rates rise. Under the changes for mortgages eligible for Canada Mortgage and Housing Corporation insurance, which take effect April 19, buyers will have to meet standards for five-year fixed-rate mortgages even if they opt for variable rates. Limits on refinancing will be stricter and people buying a home that they don’t occupy must make a down payment of 20 per cent.
In March, three out of five homes in Winnipeg sold at or above list price, which is another indicator of increased market activity.
“REALTORS® were also instrumental in selling 50 per cent of the homes in March for above list price,” said Davis.
Taking into account a ratio of 104 per cent for sales to list price, the average sale price for every home sold in March went up four per cent.
“Of course,” said Davis, “we had terrific weather in March which encouraged prospective buyers to check out new MLS® listings and do the spring cleaning necessary to prepare their homes for sale.”
Year-to-date MLS® sales were up 10 per cent by the end of March to 2.309 units, while dollar volume increased by 20 per cent to $493 million, when compared to the same period in 2009.
So far this year, nearly two out of every three homes listed on MLS® have sold.
For residential-detached home sales in March, the most active price ranges were between $200,000 and $249,999 and between $150,000 to $199,999 at 21 and 19 per cent, respectively. Not far behind was the $250,000 and $299,999 price range at 16 per cent.
Sales of residential-detached homes under $100,000 represented just an eight per cent market share.
Thirty-seven per cent of all condominium activity was in the $150,000 to $199,999 price range, while another 21 per cent of activity was in the $100,000 to $149,999 price range.
The average number of days on the market for residential-detached homes was 26, which was three days quicker than the previous month, but four days less than March 2009.
The average number of days on the market for condos was 24, six days quicker than March 2009.