Real estate activity continues to pick up in the area with not only higher price points but more on the market too.
The average price for a residential detached house is $235,000, compared to $211,733 last year. At the same time, 104 properties were on the market at the end of June, up from 92 last year.
MLS statistics indicate the 180 properties sold during the first six months of this year had a value of $39.7 million compared to the $29 million for the 150 properties sold for the first six months of 2012.
Half of the 104 single family homes that sold were sold for less than $235,000.
Terrace Remax principal John Evans did note that listings are down compared to last year – from 207 to 204 – a sign that people are staying because of better economic conditions and are not leaving.
At the same time, more people are arriving and buying homes which then reduces the number of homes on the market, he said.
“And we are going to need new stock,” Evans said. “I predict within a year we’re going to see a shortage.”
On average it took 58 days for a single family home to sell in the first six months of this year. But since the spring some homes have been selling within several days of going on the market.
“The big thing we’re seeing here, market in spring boomed…prices have really gone up,” Shannon McAllister, owner of Terrace Real Estate Company said.
However McAllister cautioned that the prices of homes are influenced by many factors, such as the economy, the motivation of seller, the neighbourhood, and the extent of upgrades to the house.
And with the higher price trend Terrace is currently seeing, the dynamic of who can afford to buy has changed.
McAllister explained that last year a first time home buyer could expect to find a house in the $170,000 to $200,000 price range, while this year those same houses are priced between $220,000 and $280,000.
With higher prices, more capital is needed for a down payment, and it becomes more beneficial to have a down payment greater than the five per cent minimum, as there is a greater amount being charged interest.
With any purchase in the housing market, a bit of caution is always wise.
“I don’t know if these projects or these projects will go through,” McAllister said, as the speculation of big work projects has driven the prices up somewhat.
“Be careful,” she said. “Watch what you are paying for the neighbourhood.”
Real estate boards and banks in Canada have in place stricter regulations on what houses can be sold for, since the real estate crash of 2008 in the United States.
McAllister said that banks will not approve the mortgage of a house purchased for substantially higher than the appraised value, and said more appraisals are being conducted in light of 2008.
In Terrace she said she is not seeing a huge difference between the appraisal prices (although realtors are not always shown these figures), to the list price, and to the sold price, and said most prices are realistic.
But that’s not always the case.
“Some are overpriced, I feel confident saying that,” she said.
In the Terrace market, anything over $300,000 becomes a different ballgame. Buyers need to be more qualified, meaning they tend to be two income families who are moving up the real estate ladder.
McAllister also said higher priced homes are also being purchased by out of town clients who tend to be company supervisors and executives relocating to Terrace with their families.
According to McAllister, these clients are willing to pay over $300,000, as they typically come from markets where prices are much higher, such as in Vancouver and Calgary.
In the meantime, Evans noted that it is still cheaper to buy than to build.
“Right now for $350,000 you can buy a very nice house in a nice neighbourhood that’s 20 years old. To rebuild that very same house, it will cost you $450,000. Right now, someone may not be prepared to pay that premium”
Despite the higher prices Terrace is seeing, McAllister said it is still in an investors best interest to purchase a home instead of renting.