Tuesday, May 12, 2009

Housing Sales boosted in April thanks to 'Spring Fever'

Original Article here

Housing sales boosted in April thanks to 'Spring fever'

The president of the Woodstock-Ingersoll and District Real Estate Board credits last month's sharp increase in area housing sales to a combination of "spring fever" and rock bottom interest rates.

While the spring months are traditionally strong for the local real estate market, Bill Taplay suggested that plunging mortgage rates were providing that extra enticement for potential buyers. With the Bank of Canada dropping its benchmark lending rate last month to a record low of 0.5 per cent -- a step intended to encourage the economic recovery -- more local residents are considering a home purchase, Taplay said.

"People are getting more confident," the board president said. "I think the interest rates and prices are helping that.

"In the last month, it's been incredibly busy."

From March to April, the resale housing activity in the Woodstock and Ingersoll regions -- bolstered by some "great inventory" -- jumped by 31 per cent. The board also reported a 2.2 per cent increase in price over the April 2008 sales prices, which Taplay attributed to additional high-end sales.

"That's also good news because that hadn't been moving," he said.

The total April sales volume for the board's area was roughly $20.2 million while the average two-storey house price was $162,000 in Ingersoll and $254,000 in Woodstock. The average price for ranch homes in both Ingersoll and Woodstock was hovering around $235,000.

"For us it's good news," Taplay said. "It's been a long winter. We have (slumps) periodically but we always rebound.

"We're lucky to be where we are. It could be a lot worse."

Taplay also suggested that recent federal government incentives announced in the budget spurred some of the housing activity, especially among first-time buyers. By increasing the maximum registered retirement savings plan withdrawal permitted by its Home Buyers' Plan program from $20,000 to $25,000, as well as introducing a $5,000 tax credit for first-time buyers, the federal government has helped reverse a downward trend, Taplay said.

"(The recovery) couldn't come at a better time," he said.

The local reversal seems to be in lockstep with the national trend, which showed strengthening home sales in recent months. While housing sales still weren't at 2008 levels, economists were cautiously optimistic because the decline wasn't as pronounced as expected.

"On an annualized basis, average home prices in early 2009 are running about six per cent below last year's levels, while sales volumes are down 16 per cent, " Adrienne Warren, a senior economist at Scotia Economics, said in a May press release. "This is tracking a slightly better performance than our forecast for a 10 per cent decline in average prices this year, and at the low end of our forecast for a 15 per cent to 20 per cent drop in sales."

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