March 03, 2010
WATERLOO REGION – Homebuyers taking advantage of low mortgage rates are heating up the winter real estate market.
Local real estate boards recorded 795 sales last month, up 52 per cent from 523 in February last year, when the region was mired in a recession. Last month’s total is 12 per cent higher than the 712 sales recorded in February 2008.
The 553 homes sold last month by agents with the Kitchener-Waterloo Real Estate Board is the board’s highest February tally in more than two decades. They sold 369 homes in February 2009.
The Real Estate Board of Cambridge recorded 242 sales last month, up from 154 a year earlier.
“The strength in the resale market now compared to last year’s weak showing is stretching current year-over-year comparisons,” Bob Peace, president of the Cambridge board, said in a news release.
It appears that homebuyers are trying to get a jump on the Harmonized Sales Tax, which goes into effect July 1 and will boost the cost of buying a home. But the biggest factor sparking the surge in sales is historically low interest rates, said Ted Scharf, president of the Kitchener-Waterloo board.
“Consumers are taking advantage of current interest rates now before they are predicted to rise this summer,” Scharf said in a news release.
The Bank of Canada plans to keep the key bank rate at 0.25 per cent through June. However, in the wake of a report Monday that the Canadian economy is growing more rapidly than forecasted, economists say borrowing rates may increase sooner and rise more aggressively than had been expected.
With the strong sales, there was another double-digit increase in prices last month. The average sale price in Kitchener and Waterloo rose 12.2 per cent to $276,891; in Cambridge, it rose 14.3 per cent to $280,996.
Strong demand for homes in higher prices ranges contributed to the increases. For example, in Kitchener and Waterloo there were 75 sales in the $300,000 to $350,000 price range, an increase of 150 per cent from a year earlier.
Average prices fell a year ago, so last month’s increases aren’t as large as they seem when placed in a historical context. The average price in Kitchener and Waterloo is up 6.5 per cent from February two years ago; in Cambridge, it is up 10 per cent compared to two years ago.