I am seeing homes that have sat unsold since last fall selling at or above listing!
I don't understand that. Yes mortgage rates are at historic lows, as I keep saying, but if the house wasn't worth $X six months ago, it isn't worth that now either.
What could be the conceivable reason for buyers to get back into 'panic' mode:
1) We have had a flood of retirees from Alberta and out East.
2) Buyers think they have missed the correction (which lasted from last August until December 2008) and house prices will run from now on and they will never be able to buy.
3) Like a Pavlovian dog, they have been beaten so many times by resurgent prices, that they are using the lower rates to jump on property, price be D@mned! Just gotta get in!
4) We bears are wrong and the correction is over. The recession will now end and the money will be flowing into over-priced assets again. The new buyers are just a sign of that happening.
5) There are off-shore buyers coming in with lots of cash eg from a newly resurgent China or 'fear' money from South Korea and Iran, and they don't really worry about Days on the Market or other subtleties.
Prices are still well below 2008. The recession has stopped dropping into a depression but is far from over. The TSX dropped 5% in one day at the first whiff that demand for commodities may not be that strong, when the World Bank said the world will contract next year.
Today it is rising off a bid from a Chinese company for one of our oil producers and raised OECD world growth estimates.
Which one is right? Growth in 2010, or further contraction?
How are you going to place your bets?