Despite a drop in MLS® sales activity during July and August, year-to-date sales are slightly higher than 2009’s total for the same perod, while dollar volume is up 11 per cent and closing in on the $2 billion mark, according to WinnipegREALTORS®.
August sales activity showed a softening of the first-time buyer market, as residential-detached sales under $200,000 were down 33 per cent when compared to the same month last year.
The weakening first-time buyer market is being attributed to the province’s land transfer tax — unlike in other provinces, such as Ontario and B.C., Manitoba has no exemption for this class of home buyers — and tighter mortgage lending requirements, as well as the spectre of higher interest rates, which prompted first-time buyers earlier in the year to fast-track their home purchases.
This week, the Bank of Canada raised its rate by another 0.25 per cent, which is its third rate hike in three months. In response, Canada’s charter banks immediately raised their prime lending rate to three per cent. Changes in mortgage rates are expected to follow.
But moderating sales activity is allowing listings to catch up to demand,
according to WinnipegREALTORS®, heading toward a more balanced housing market. Proof that the market is heading in this direction was the fact that the total sales price to total list price ratio of residential-detached market activity was just over 100 per cent, with 100 per cent indicating equilibrium between sales and listings.
WinnipegREALTORS® president Claude Davis said there was reason for optimism in the marketplace. “Our first week of MLS® sales in September is running neck and neck with 2009, and there is a better supply and choice of listings going into the fall than has been the case in a number of years.”
Davis said another positive development is that the unsustainable trajectory of average monthly price increases has levelled off to a more reasonable rate.
“While the year-to-date average sale price of $242,000 is 11 per cent higher over the same period last year, the August average monthly home sale price of $234,000 has dropped off from the earlier peak months of $250,000,” he added.
A new report from Canada Mortgage and Housing Corporation says sellers’ market conditions in Winnipeg will push the average price of a resale home upward by seven per cent in 2010.
According to CMHC’s third-quarter 2010 Housing Market Outlook, the Winnipeg Census Metropolitan Area dominates the provincial housing market, accounting for 88 per cent of all existing home sales.
“Higher prices will provide an incentive for those wanting to sell and listings are projected to rise over the balance of this year and into next,” according to the CMHC report.
CMHC said rising prices, increased mortgage rates and higher carrying costs will moderate resale housing demand in the second half of 2010 in contrast to the elevated pace of the first half of the year.
The Cnadian government agency also projects that the increase in listings will moderate price growth in 2011 to below half the growth rate experienced in 2010.