The mood in the housing market has certainly rebounded. For those of us in the real estate industry, we saw a better than anticipated finish in 2010 and see the continued optimism in early 2011. This was confirmed this month by the Canadian Real Estate Association (CREA) which has revised its 2011 forecast upwards for home sales activity.

“Homebuyers recognize that low mortgage interest rates represent a once in a lifetime opportunity,” says CREA President Georges Pahud. “At the same time, they expect that rates will rise, so they’re doing their homework in order to understand what it could mean in terms of higher mortgage payments down the road before they make an offer.”
CREA forecasts that the national sales activity will rebound by three percent, which is roughly on par with the 10-year average. The upward revision to CREA’s forecast for 2011 reflects recent improvements in the economic outlook and a further expected improvement in consumer confidence.

Recent changes to mortgage regulations (the maximum amortization period was recently shortened to 30 years from 35 and the maximum homeowners can borrow in refinancing mortgages was reduced to 85 percent from 90 percent) will further ensure buyers don’t get in over their heads; that they won’t buy more home than they can afford and find themselves in trouble when interest rates rise – which they will inevitably do.

“The new changes to mortgage regulations will likely bring forward some sales into the first quarter that would have otherwise occurred later in the year, particularly in some of Canada’s more expensive housing markets,” says Gregory Klump, CREA chief economist. “This is expected to produce a milder version of the volatility in sales activity that we saw last year which resulted from additional transitory factors.”

Three transitory factors contributed to volatility in sales activity last year: changes in mortgage regulations, the early withdrawal by the Bank of Canada of its conditional commitment to keep interest rates on hold until the second half of 2010, and the introduction of the HST.

CREA expects that home sales activity will gain traction after dipping in the second quarter as the economic recovery and job growth continue, incomes grow and consumer confidence further improves. “Even though mortgage interest rates are expected to rise later this year, they will still be within short reach of current levels and remain supportive for housing market activity. Strengthening economic fundamentals will keep the housing market in balance, which will keep home prices stable,” says Klump.

In the Oakville and Burlington market, sales were down last month compared with the same month last year, but prices were up – indicating we are still in a solid real estate market with home values remaining strong. In Hamilton/Burlington sales were down 7 percent but prices were up 9.4 percent. In Oakville sales were down 11 percent and the average price was up 9 percent. The average price rose from $590,657 last year to $644,849 in January in Oakville.

Pahud says the housing market and buyer psychology is different now than it was at the beginning of last year, and advises that buyers and sellers consult their realtor to understand local market trends.

I’ve consistently advised that the key to finding a good deal or selling quickly for top dollar is to work with a broker who knows the community. The professionals at The Dan Cooper Team of Royal LePage have such a track record, which has led to our achieving the Number 1 Team in Canada for Royal LePage for 7 of the past 10 years.

Dan Cooper is an award-winning broker with Royal LePage Real Estate Services Ltd., Brokerage – the Number 1 Royal LePage Team for Canada in 2009. He can be reached at 905.338.3737, direct line at 905.849.3303 or through his innovative and interactive website at DanCooper.com. Be sure to catch the Dan Cooper Real Estate Series on DailyWebTV.com. For his free booklet How To Sell Your House For Top Dollar – Fast! or his Guide to Oakville Real Estate, please call the Dan Cooper Team.