It’s been a crazy week. I sold a multi-million dollar home in 12 hours. 2 out of 10 homes my buyers want to see have already sold conditionally. I’ve also been in several multiple offers.
The number of homes sales is only down 7% from the same time last year according to TREB. Considering the insanity of last year that is really saying something.
And the current average price is only down 4% from $399,117 to $383,161. If everyone considered early last year to be an inflated market, it would appear that the current market is not in a downturn, but closer to a happy medium.
That is not to say that once spring fever is passed this momentum will continue trending upward. I still believe we have yet to see the trickle-down effect of job losses and the US economy and summer may cool off considerably.
Part of the activity is being spurned on by unbelievably cheap money.
As noted by Peter Majthenyi from My Mortgage Planner, “…the Fed lowered the overnight lending rate to .25% … that’s right .25% … it has never been this low since Canada started recording interest rates at the beginning of the century.”
On top of that, the Central Bank is assuring us that will not change until 2010!
For the first time, Peter is is recommending that working with a variable rate is not necessarily the way to go.
He says, “…variable mortgages performed better 88% of the time over the long term, but now we are experiencing that small 12% period when fixed may be better. If a 5-year fixed mortgage can be had for 3.75%, or a 10-year fixed for 4.99%…take a break from variable for now and revisit it upon the renewal when fixed rates may be higher.”
Even if you are currently locked, it may make financial sense to break it. No matter what you current situation, you may be able to benefit.
Check out Peter’s recommendations below as well as the mid-month TREB report.