Boy oh boy, the real estate market is hot. I always said the recession would end quickly and the demand would be stronger than predicted but wow, this is really something.
In an area that includes Collingwood, Clearview, Blue Mountains, Meaford, Grey Highlands and Wasaga Beach, sales in the first two weeks of September are already up 7% compared to the same period last year. Personally, this week in real estate will likely set a new personal record in my 20+ year career. Last week-end, three of the properties I had listed for sale all sold and two involved competing offers. Properties that have been listed for a long time are suddenly selling with multiple offers in many cases.
If you look at this mornings paper, an article on the first page of the business section talks about how Canadian banks got through the recession relatively unscathed and are now on an acquisition spending spree. On page 2 of the same paper, you can read about the 90 banks that closed in the U.S. this year. As Canadians, we seem very confused by those messages.
I can’t help but think about the naysayers who put off buying over the fall and winter when prices were low, interest rates were low and there were no buyers competing for the same properties. THAT was the time to buy but people were afraid and far too influenced by media reporting on a sub-prime crisis that didn’t even exist here in Canada. As soon as the media turned positive, buyers returned in force but many have paid a price for that delay. For example, I sold a condo to some folks a few months ago in a development up near Blue Mountain. Based on sales in the same development in the last two weeks, the unit they bought mere months ago has already seen a rise in value of about 10%. That means people buying the same condo today will spend about $20,000 more than they would have just months ago.
Right now, we’re seeing sellers return to the market as confidence increases which means that for a while, we’ll see a rise in the inventory of properties for sale. That will quickly clear out at which point prices will climb more dramatically and we’ll head into an inflationary period. By the time the Bank of Canada’s commitment to keep the prime rate low ends mid 2010, the conditions will likely exist that lead to rising interest rates. I really think that by late 2010 and early 2011, we’ll face much higher rates which will cool the real estate market back to stable levels. In the meantime, prices will rise.
I don’t want to sound preachy but I’m speaking from my truest beliefs. If you are still sitting on the fence when it comes to buying real estate, you may want to get off and get moving. Waiting could cost you in higher prices AND higher interest rates. Why wait for that?