The Winnipeg Realtors Association released its November sales figures on Tuesday and it was good news all around. There was an increase of 42 per cent from the same period last year. The number of properties sold represented the second-best year on record, behind only 2008.
Many people would question what the resale market has to do with the new-home market. Some would even consider it the competition, and think that more resales would hurt new home sales. Nothing could be further from the truth.
The new-home and used-home markets work hand in hand for the benefit of both. A typical pattern in Manitoba is that the owner needs to be able to sell his current home in order to step up to a new home. Therefore, the more used-home sales, the greater the opportunity to sell new homes.
The fact that resale homes are moving faster and frequently above list price gives the new-home buyer additional leverage when looking for that perfect new dream home. A flat market would mean people are staying where they are and are not interested in moving. Resale activity indicates that there is mobility in the market and that all options are open for consideration.
Apartment vacancy rates in Winnipeg are under one per cent and the lowest in Canada. With mortgage rates as low as they are, buying is an extremely attractive option. The average resale-home price for the past two months was slightly over $215,000, most in established neighbourhoods with few options to build new.
In 2008, the average price of a new home in Manitoba was $349,000. New homes tend to be in new neighbourhoods in newer subdivisions. With the equity of selling your existing home (two-thirds the price of the average new home) with current mortgage rates (around four per cent), moving up to a new home has never been easier.
The Winnipeg Realtors Association and the Manitoba Home Builders' Association work very closely in monitoring the market and promoting housing affordability to consumers. In the next week, Canada Mortgage and Housing Corp. will release November numbers for new-home starts in Manitoba and Winnipeg, with 2010 projections.
It will be interesting to see if the jump in existing home sales has an immediate positive effect in new-home starts and continued new construction in 2010. We're betting that it will.
Mike Moore is president of the Manitoba Home Builders' Association.
