House buyers in Canada are fighting each other for houses, trying to beat mortgage rate increases. Property prices are in a bubble in markers such as Toronto and Vancouver, and also Ottawa. Approximately three out of every five properties are getting multiple offers.
These buyers are trying to get lower rates, as opposed to waiting for the prices to fall. Americans have seen this situation before - not long ago actually.
Phil Soper, president and chief executive of Royal LePage Real Estate Services, said the national market is highly volatile."In Vancouver and Toronto, for instance, the dramatic unit sales fluctuations exhibit a significant degree of market irrationality: inordinately fearful when faced with poorer markets; and overly enthusiastic when the tables turned".
Says the Ottawa Citizen today:
"With mortgage rates rising, Ottawa homebuyers increasingly are fighting over available properties.
"We are seeing first-time buyers taking advantage of interest rates while they are still low,'' said John Rogan, broker and manager of Royal LePage Performance Realty of Ottawa.
"Approximately three out of five listings are getting multiple offers and, on average, properties are selling above the asking price. We are in a seller's market.''
Prices in Ottawa in Q1 2010 rose in a range of nine per cent and 11 per cent.
"The market is very active and that creates challenges for inventory. Inventory is down 30 per cent because of the high volume of unit sales," Rogan said.
"This time last year, an average house was on the market for 46 days and now the average is down to 38 days."
Bungalow price increases:
- Vancouver, 21.8%, to an average of $906,045.
- Calgary, 2% to 16%, to $382,000
- Toronto: 13% to $459,107
- Montreal: 7.2% to $249,172.