Brisk national home sales reflect mortgage changes coming in March

The Canadian Real Estate Association says a 4.5 per cent rise in home sales in January over a month earlier reflects Ottawa’s announcement to change the allowed amortization period on government-insured mortgages from 35 to 30 years.
CREA is suggesting that buyers are rushing their home purchases in anticipation of the rule change that takes effect on March 18.
“We anticipated the recent announcement of tighter mortgage regulations ... would pull forward sales activity into the first quarter of 2011, particularly in some of Canada’s more expensive housing markets,” said Gregory Klump, CREA’s chief economist.
Locally, January sales were also brisk, according to WinnipegREALTORS® president Ralph Fyfe. In January, a new dollar volume sales record was set for the month. Last month, dollar volume sales jumped 22 per cent to $124.5 million, while MLS® sales went up 16 per cent to 566 units when compared to the same month in 2010.
But Fyfe said the sales and dollar volume jump was due to other factors rather than the mortgage changes announced by federal Finance Minister Jim Flaherty.
“Jobs, immigration and low interest rates continue to keep our local MLS® market active,” said Fyfe. 
“Given the strength of our local market, it is not as cyclical as it used to be and there is less concern and less hesitation to put properties on the market early in the year.”
“The tightening of the mortgage regulation has only a small impact on the market,” Fyfe added, “as local home buyers are now amortizing their mortgages for 25- and 30-year periods, anyway.”
CREA wants the federal government to wait before making further mortgage changes.
“It will take some time before the longer-term impact of the latest mortgage regulations on the housing market can be known,” said CREA president Georges Pahud.
“For that reason, further action shouldn’t be taken until the impact can be measured.
“In the meantime, if last year can be used as any guide, sales activity may heat up further as we get closer to the date on which tighter mortgage regulations come into effect, especially in some of Canada’s pricier markets.
“That said, local housing market trends often diverge from national trends, so buyers and sellers should consult with their local REALTOR® to understand how the market is shaping up where they live,” he added.
Fyfe said there were more listings in January, offering more choice to buyers.
“Proof of a more balanced market was the ratio of total sales price dollar value to total listings price value dropping under 100 per cent,” he added.
A more heated market with plenty of multiple offers will push the ratio above the 100 per cent level.
In January, residential-detached homes selling above list price decreased  from 35 per cent to 31 per cent when compared to the same month last year. 
For condos, the drop was from 24 per cent to 10 per cent selling above list price, but this was likely attributed to the large gains in “at list price” sales when compared to the same month in 2010.
The majority of residential-detached and condo sales in January were under list price.
There are still a number of MLS® areas and highly-sought after price ranges where sales of existing inventory and new listings are quickly being depleted, which drives up home prices in these areas, Fyfe added.