“Where will the Winnipeg market go, and when will it end?

After reading this, be sure to check out Winnipeg Home Finder

If you like this post, please click the +1 button just below this line

Follow @bokauffmann

Trying to predict the market is like trying to predict the weather: there are simply too many factors involved to do it accurately.  Some of my colleagues thought it might have ended in 2006, but that was not the case.

This market is fuelled by several factors:  First time home buyers looking for their home and ‘empty-nesters’ looking to downsize.  Since both of these groups of people are looking for the same type of home, these smaller, entry-level homes, especially in the range of $150,000 to $200,000 are the big factor in this boom. We’ve now seen 1000-ft side-by-sides, without a garage, in the south end of the city, selling for around $170,000. Townhouse condos in one project jumped over 20%.

Another factor appears to be ex-patriots returning from other provinces, such as Alberta and Ontario.  Having sold their modest homes for HUGE dollars, these folks are returning to find that YES, $300,000 still buys a very nice home in Winnipeg.

So, if you are a home-owner, enjoy.

If you are home-buyer, waiting for this market to end may not be the best strategy. Annual price increases of 15 to 20% far outpace wage-hikes, so waiting to save a bit more money for that first home could mean falling further behind. 

Some buyers have expressed concern (or hope) that the bubble will burst, much like it has done in the U.S The U.S. market-drop came when several different problems combined to create a ‘perfect storm’ of sorts.

First, home-builders in the U.S. follow a different business plan than their Canadian counterparts:  For one thing, in the U.S. they build homes ‘on spec’, meaning that they just build them and hold them in inventory.  Builders may have a hundred or more homes, just sitting and waiting to be purchased, whereas in Canada, for the most part, the home is pretty much pre-sold. When a small drop in activity led to an overstock of homes, builders got scared and dropped prices and offered incentives so that first-time homebuyers could afford to buy these homes.

This led to storm #2:  Under-qualified buyers overextended their credit and purchased homes which were normally out of their price range.  When the short (6 month) mortgage re-opened at a higher rate, they suddenly could not afford to keep the house, and it went on the market, competing with other, new homes. This caused a drop in prices, in an effort to chase after buyers who were quickly starting to loose interest in what they saw was a burst in the market bubble.

This may be a bit of an over-simplification, however I hope it goes a little way to explaining what happened.  Aside from the difference in home-builder philosophies, our Canadian banks also have higher standards than their U.S. counterparts, further protecting the industry and home-buyers alike. While no one can predict where this will go, I also know some of my buyers who purchased a nice home 2 years ago for around $50,000 less than they would have paid today.

Receive Blog Posts via e-mail

You'll receive an e-mail twice a month with the latest blog post headlines.  Read the ones you want.  Unsubscribe anytime.

Email:

Powered by Subscribers Magnet

I hope you enjoy reading my blog. Go here to get a look at all available Remax House Listings, all available Remax Condo Listings and all available Remax Luxury Properties in Winnipeg. Please follow me on Twitter and visit my Facebook Fanpage. Google+ Profile About Me