Climbing resale housing activity is the result of consumers trying getting a jump on mortgage rule changes being implemented by the federal government in March.
This is backed up by the latest numbers the Canadian Real Estate Association (CREA) that indicated national resale housing activity rose 4.5 per cent in January 2011 compared to the previous month, reaching the highest level since April 2010.
“We have noticed an increase in preapprovals and clients who are actively looking for a home to purchase,” said mortgage broker Paula Roberts of The Roberts Group. “Some of our realtors are working hard to put deals together. This combined with recent interest rates hikes is pushing anyone who is on the fence about purchasing in the spring.”
Roberts says that although her office is noticing an increase in business, clients aren’t panicking. ”We find that most clients who are purchasing are fitting within the new rules. Like the changes last year, they are an adjustment but before long will be second nature and accepted.”
“We anticipated the recent announcement of tighter mortgage regulations, which will come into effect this March, would pull forward sales activity into the first quarter of 2011, particularly in some of Canada’s more expensive housing markets,” said Gregory Klump, CREA’s chief economist.
“It will take some time before the longer term impact of the latest mortgage regulations on the housing market can be known,” said Georges Pahud, CREA’s President. “For that reason, further action shouldn’t be taken until the impact can be measured. In the meantime, if last year can be used as any guide, sales activity may heat up further as we get closer to the date on which tighter mortgage regulations come into effect, especially in some of Canada’s pricier markets”
John Panagakos a mortgage broker with The Mortgage Centre Canada in Toronto has also seen business pick up recently. “I have seen my mortgage business double in January with quite a flurry of calls from clients and realtors,” he said. “I have seen a considerable amount of multiple offers since the [mortgage rules] announcement.”
Actual (not seasonally adjusted) national sales activity via the Multiple Listing Service (MLS) Systems of Canadian real estate Boards came in 6.6 per cent below levels in January 2010. This was the smallest year-over-year decline since May 2010.
Will the numbers continue to go up? Some aren’t so sure.
“The growth spurt will likely be short-lived, and come at the expense of future sales. As was the case the last time the federal government made mortgage insurance rules more restrictive, the strength in sales will likely be followed by a short period of weak housing data,” said TD economist Diana Petramala in a statement.