Spring housing market booming in anticipation of the HST and new mortgage rules

By Susan Eickmeier

Scotiabank released its real estate trends report in late March, which predicts that overall, most of Canada will be a stronger seller’s market for the rest of the first half of 2010 because of rising prices and a stronger demand.

The new mortgage rules and the impending Harmonized Sales Tax (HST) in July are also creating a rush of people buying new homes. The new mortgage rules aren’t going to be implemented until April 19, but the booming housing sales will continue because of the urgency in buying as well as continually rising prices.

The Scotiabank economist who wrote the report, Adrienne Warren, was quoted as saying in the report’s presentation, “I think you’re going to have a very active spring market, probably some cooling off in the second half of the year. We’re looking at once-in-a-lifetime interest rates that people are taking advantage of, but certainly confidence is coming back, the job markets are stabilizing.” Economists also expect that by the end of the year, developers will be planning on building far fewer homes because the demand will fall. .

Indeed they are, as over 33 per cent of the jobs lost during the recession have already been replaced. Canada’s recovery is also outpacing that of other developed countries.

According to Scotiabank, an expected 510,000 home sales are expected this year, which is just under the record set in 2007 but still 10 per cent higher than last year. The average prices are expected to increase 8 per cent to a record of 345,000, with housing starts expected to rise 41,000 to a total of 190,000.

When interest rates do rise, economists are expecting them to be raised slowly from between half a percentage point and a full percentage point over a few months at least, probably starting in the late spring.

Susan Eickmeier is a Sales Representative with Royal LePage R.E.S. Ltd/Johnston & Daniel Division working in the Central Toronto market.  Susan is also a regular contributor to the Muddy York Blog. Susan’s website is located at www.susaneickmeier.com

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