Mon 7 May 2012
Mississauga, Oakville, Etobicoke Spring Real Estate Market Surges Ahead
Posted by Cynthia under Buying a Home, Home Prices in GTA, Home Prices in Mississauga, Mississauga Home Sales, Mississauga Real Estate
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Waiting for the market to cool off before buying a home could end up costing you more money then it would if you bought a home now and took advantage of the lower mortgage rates mortgage.
With predictions of home prices set to fall many potential home buyers including home upgraders are choosing to sit on the sidelines and take a wait and see approach with their real estate plans. Home buyers refusing to participate in multiple offers are also bowing out until the market cools off a bit. Is this the right approach?
Since March when predictions were released that Mississauga Property values along with most other areas of the GTA would experience a price reduction of 20—25%, the Mississauga real estate market along with most other markets across the GTA have continued to flourish. During the first two weeks of April the average selling price of a home increased by 1% as compared to the average selling price at the end of March 2012. Although this average price does not necessarily mean that all homes have increased 1% in value in two weeks, it provides some guidance that home prices are still on the increase. By the end of the month the year over year increase in average selling price was up by 8%. Total sales figures were up 18% over last April.
The inventory of homes on the market continues to be very tight and there are more buyers out there then there are homes for sale. The hope is that as we move further in to spring the inventory will increase and prices will stabilize. If not then what next?
A continued tight inventory will push prices up even further. At the current level of monthly increases in the average selling price that could amount to an increase of about 12% over the next year. Based on the year over year average increase of 10% published for March 2012, this 12% doesn’t seem totally out of whack.
The Canadian economy seems to be moving along quite well and according to the “Big Bank Chief” if it continues to improve a gradual increase in the central bank rate could lead to an increase in lending rates. Some economists believe the increase will start towards the end of 2012.
Typically the real estate market doesn’t react quickly to moderate economic changes. Historically in an increasing interest market it takes about 6 months before the rate increases have an effect on home prices. Given the record low rates in the market right now it would not be unreasonable to assume that, should the central bank begin to raise rates at the end of the year that actual mortgage rates will be 1% higher by this time next year. Given the current market conditions and the length of time it takes the market to react to changes waiting for the market to cool off before buying a home could end up costing you more money then it would if you bought a home now and took advantage of the lower mortgage rates mortgage.