The spring thaw has been delayed by unseasonably cold weather, and the same bitter temperatures are having a chilling effect on the spring housing market, according to statistics released by the WinnipegREALTORS® Association (WRA).
“Instead of March madness,” said WRA president Richard Dettman, “it was March calmness with buyers noticeably absent from our MLS® market at this time of year.”
With so much snow still on the ground, people aren’t too prone to be thinking about buying or selling a home, he added.
The March statistics released by the WRA reveal a 26 per cent decrease in MLS® sales from the same month last year to 844 units, and a dollar volume drop of 15 per cent to $224.7 million.
“It’s like we’re still in the depths of winter rather than into spring,” said Peter Squire, WRA’s market analyst. “You also have to remember that last March was so warm that people were out on the golf course.”
The sales figures for March were the lowest for the month since 1995, when the first version of the NHL Jets were playing at the Winnipeg Arena.
Dettman said lower sales also resulted from a chill in the intentions of first-time buyers.
“In looking more closely at what happened in March, the drop-off in buyer activity was three times greater in the first-time house ranges ($300,000 and below) than in the upper ones.
“In fact, our highest price range of over $500,000 clearly outperformed March 2012 in sales, less days on the market and having a higher sale price of $1.65 million for one property,” added Dettman.
Unlike first-time buyers, Squire said move-up buyers have equity built up in an existing home, giving them an advantage when purchasing a home.
“Certainly, these buyers aren’t going away,” he added.
Dettman said the decrease in first-time buyers was influenced by changes to the mortgage rules by federal Finance Minister Jim Flaherty last July. The minister reduced the amortization period from 30 to 25 years, which increased monthly mortgage payments by about one per cent.
“First-time buyers now have less room to manoeuvre, because of the tightened mortgage rules,” said Squire.
Year-to-date MLS® sales at the end of March were down 13 per cent to 2,156 units, as opposed to the 2,483 units sold during the same period in 2012. In addition, dollar volume MLS® sales dropped by six per cent to $550.4 million. During the same period in 2012, $589 million in sales were recorded.
But Dettman cautioned not to read too much into the decline in sales.
“Good or bad,” said Dettman, “we do not over react either way, as one month does not make a trend, so we will be watching April very closely to see if the spring thaw brings more buyers out of the woodwork, and MLS® sales are more in line with our expectations.”
Traditionally, the months of April and May have been the busiest for the local housing market.
While there has been a pause in buying intentions, the active inventory of listings was up four per cent by the end of March over the same period last year.
“It helps to restore some supply-balance to what has been one of the tightest resale housing markets in the country,” added Dettman. “This development should be viewed favourably by buyers feeling unduly pressured by a lack of listings.”
“Our inventory is in good shape,” said Squire.
The only uncertainty is flooding, he added. “In bad years, listings have dropped in the more flood prone areas of rural Manitoba.”