With relatively few homes on the market this spring, those brave sellers who listed early were rewarded handsomely. The average sale price of a town house rose to $624,325 between January 1 and April 28, 2017. During the same time period, the average price of a detached home rose to $1,236,600. In terms of detached homes, it should be noted that many of the 14 sales were high end, or larger homes, and this accounted for the huge increase over last year’s average sale price of $856,000. The red-hot real estate market is making a lot of news. Many politicians are putting the blame on a variety of targets including foreign buyers, vacant properties and real estate agents. Real estate agents are blaming the snail’s pace of municipalities’ approved in-fill projects and new housing developments, and a record breaking low inventory of homes coming on the market. However, this highly publicized attention on the market may be having some effect, as there are signs that things may be changing. There has been a spike in listings, which may be just the seasonal trend kicking in, or possibly that sellers are considering that, with values at record highs, it may be time to cash in and downsize to a condo or the cottage. The law of supply and demand may write the conclusion to this story. With more inventory, the market should cool and become more balanced so that sellers will no longer receive 10-30 offers on their properties. As for buyers, they may decide to take the “let’s wait and see” position, hoping that government will step in and fix everything. It is doubtful that the steps the governments have already announced will have much impact, but if we start seeing a substantial growth in inventory, the market will definitely change from being a windfall for sellers to a much more favorable market for buyers. Buyers will also have to keep a close eye on interest rates, as rates may rise while waiting for prices to fall. The other key player in the end game will be the financial institutions. After all, banks really have the final say in what a property is worth unless you have a lot more to invest than 20%. Right now, bankers are looking at real estate in the same terms as commodity futures. The big question is: “Will there be a correction?” There are lots of theories but I have no definitive answer. Like everyone else, I can only speculate that if there is, I believe it will only be to keep the market on par with traditional gains (2-5%) and possibly a little drop in current prices. In other words, the days of 30% increases may have come to an end, but hopefully, current values will remain established. We will have to wait and see. Unfortunately, values in Real Estate are based on past results. In the last week of April, with winter behind us we started to see a little more activity in Rockwood. Unfortunately, the noise from the airport, which is anticipated to continue until mid-May, might be a spoiler for those who are not advising potential buyers that current conditions are way outside normal.
