Where are all the houses for sale? They've all sold! This market is unbelievable. A house gets listed, and if it’s priced reasonably and shows well, it sells!! And quickly! In the past, the guidance I would give people was to sell first before buying something new. Now, no way! No worries that your house won't sell...so buy first to make sure you'll have somewhere to live when your home sells! The good news is that your house will sell, and if it shows well and is priced within the ballpark, it will fetch a good price!

Why is this market so nuts? Because of Change! The Bank of Canada has indicated interest rates will go up by June 2010 if inflation rates remain in check… So buyers are out in droves to buy while the rates are low. Sellers, however, think that prices are still going up and want to hold out. Or maybe they just can't find a new house to live! Why is it so rarely a balanced market? Wish I knew.

Saw a GREAT speaker at the Fall Re/Max Sales Rally on October 1. Craig AlexanderSenior Vice President & Deputy Chief Economist, TD Bank Financial Group, spoke with us about market trends and what’s likely to happen in the real estate market in Canada and the GTA in the near future. Here’s what I took away from his presentation:

There was nothing structurally wrong with Canadian economy, but we got a shock to our Export business due to the US Economy. However, Canadian Provinces should return to growth by next year. Canadian housing prices and sales dipped late last year and early 2009 but because the Bank of Canada was so quick to respond by dropping interest rates to all-time lows, housing prices rallied after that dip despite the recession in other parts of our economy. Alexander thinks that right now we are half-way through this Sellers market, and as housing prices rise, the housing market will become more balanced.

Inventory of unsold homes in the USA is lessening. However, a “healthy market” is defined as having 4 months of inventory (i.e. when 1 in 4 homes for sale are selling in a month) and the USA still has 8 months of inventory. Housing prices in the U.S. may drop another 5%.

Consumer spending in the USA is improving, although slowly. In part, this improvement has been spurred by government incentives such as “cash for clunkers”. The US consumer market makes up 70% of the US economy, so consumer spending is critical. Alexander says that Americans have lost $14 trillion in wealth and spending will be slow to rally. Now is a good time to buy real estate in the USA.

Back in Canada, the Bank of Canada a few weeks ago decreed "the recession is over", however this is a very broad statement. The Leading economic indicator of any economy is the state of the stock market, which is typically about 2 months ahead of the economy...and after a deep dive, it started to rally in March of this year. The Lagging economic indicator is typically the labour market, and this is why it still may feel like a recession now.



Susan Taylor