Housing Market Shifts into Lower Gear

Resale home prices in Pelham rose in June for the 12th consecutive month and the gain of 7.8% reported this month was the strongest experienced year to date. The 12 month average price now stands at $322,371 compared to $ 298,933 at this time last year.

However, June also marked the second month in a row that sales totals declined overall compared to last year. In May 2010 there was a drop of 29% while the June 2010 transaction total of 24 units represents a 20% decline from the 2009 total of 30 units.

The rate of gain reported in year-to date sales results is beginning to drop off. As at the end of June the Pelham sales total of 112 units translating into a 9.8% gain over the previous year. The May year-to-date total of 88 sales represented a 29% increase over the May 2009 figure of 72 units.

A May 2010 report issued by the Canadian Real Estate Association indicated that the drop in sales activity was seen in more than 70 per cent of local markets and that the overall national housing figures were impacted strongly by lower sales activity in Toronto, Vancouver and Ottawa.

The market generally appears to be shifting towards a more balanced position giving homebuyers more time to make their purchase decisions. With the new HST regulations firmly in place there is no longer the deadline incentive to complete transactions in order to achieve tax savings benefits.

Now the mortgage rate watch is on. There may be greater urgency to get to the offer table as interest rates start to rise. The combined impact of rising interest rates and our past year of rapidly increasing average prices will ultimately reduce housing affordability and lower market demand. And so goes the normal ebb and flow of market dynamics.

 



Categories: Real Estate Market Update

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