KELOWNA, BC, July 13 /CNW/ - Pent-up demand for residential housing has
bolstered sales in Canada's major markets - a clear signal that the housing
sector has shifted into recovery mode, says RE/MAX.
More balanced market conditions have emerged, effectively ending the
stronghold that buyers had on the market over the past six to eight months.
Canada's largest markets, Toronto and Vancouver, led the charge-with June
sales among the highest in history for both local real estate boards. Close to
11,000 properties changed hands in Toronto, up 27 per cent over one year ago,
setting a new record for sales in the month of June. The figure was just
slightly off the all-time peak of 11,146 units. Residential sales in Greater
Vancouver increased 75.6 per cent over one year ago, to 4,259 units, just
short of the record breaking 4,333 sales, which occurred in June 2005.
Overall, major markets began to recover in March, posting escalating sales in
April, May and June. The impetus is expected to continue throughout the
remainder of 2009, with most centres now forecasting year-end sales on par or
ahead of 2008 levels.
"While sales are the leading indicator, there are other clear signals
that recovery is indeed underway," says Elton Ash, Regional Executive Vice
President, RE/MAX of Western Canada. "Renewed consumer confidence, albeit
cautious, has been key, supported by improved economic news. In addition,
we've seen sale price-to-list price ratios climb across the country, rising as
high as 105 per cent in some communities. Vendor incentives have also come off
the table, both for resale and new housing stock."
The recent surge in resale activity can be attributed to three key
factors-pent-up demand, low interest rates, and greater affordability. The
combination-in conjunction with declining inventory levels-has created heated
market conditions in hot pocket neighbourhoods, prompting a resurgence in
multiple offers in June. Average prices are holding steady or climbing, days
on market are down, and inventory levels continue to tighten, especially at
entry-level price points.
"The strength of the market, amid the most significant global recession
in recent history once again underscores its relevance to the nation's
economic engine," says Michael Polzler, Executive Vice President, RE/MAX
Ontario-Atlantic Canada. "Canadians believe in homeownership -- a fact best
illustrated by the purchasers who ventured forward in recent months and
snapped up some of the best real estate deals this market has seen in years.
Those who chose to sit it out on the sidelines are now facing a market in
transition, characterized by the threat of rising interest rates, low
inventory levels, and upward pressure on housing values."
Although the current pace may be unsustainable, all markers point to
greater stability in the market, leading to healthier activity in the long
run, with inventory levels a key variable influencing pent-up demand.-------------------------------------------------------------------------
Residential Jan-09 Y-Y % Feb-09 Y-Y % Mar-09 Y-Y %
MLS Sales(*) change change change
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Greater Vancouver 771 -58.5% 1,494 -45.3% 2,310 -24.3%
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Calgary 928 -49.0% 1,392 -35.6% 1,797 -24.3%
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Edmonton 730 -40.5% 1,075 -16.5% 1,380 -11.4%
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Regina 170 -32.0% 232 -20.3% 277 -18.0%
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Toronto 2,670 -47.4% 4,116 -31.6% 6,171 -6.9%
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Ottawa 535 -19.4% 798 -20.3% 1,170 6.5%
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Halifax-Dartmouth 228 -37.9% 347 -26.6% 438 -18.9%
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Newfoundland
& Labrador 176 -25.4% 197 -17.2% 250 4.6%
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Canada 16,343 -40.9% 25,373 -31.0% 35,225 -13.7%
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(*)Source: Canadian Real Estate Association, Local Real Estate Boards
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Residential Apr-09 Y-Y % May-09 Y-Y % Jun-09 Y-Y %
MLS Sales(*) change change change
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Greater Vancouver 3,002 -9.3% 3,569 16.4% 4,259 75.6%
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Calgary 2,217 -8.1% 2,624 11.3% 3,047 28.0%
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Edmonton 1,843 1.1% 2,161 18.7% 2,552 15.8%
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Regina 331 -20.4% 387 8.7% 387 24.0%
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Toronto 8,107 -7.5% 9,589 1.9% 10,955 27.0%
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Ottawa 1,608 1.8% 1,990 4.0% 1,895 12.5%
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Halifax-Dartmouth 554 -26.0% 673 -17.6% 805 5.2%
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Newfoundland
& Labrador 259 -15.9% 316 -8.7% 354 0.8%
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Canada 43,473 -11.8% 49,521 -0.8% n/a n/a
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(*)Source: Canadian Real Estate Association, Local Real Estate Boards
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Market by market overview:
Greater Vancouver Area
----------------------Growing consumer confidence levels have prompted a serious upswing in
home buying activity in the Greater Vancouver Area, with sales in June (4,259)
the second highest on record for the local real estate board. From White Rock
to Vancouver, radiating out to the Fraser Valley, bidding wars are breaking
out on well-priced product. In Kitsilano, an estimated 50 per cent of housing
is selling in multiple offers. Low interest rates and increased affordability
- average price is still significantly lower than one year ago - have served
to stimulate market activity. Inventory levels have been on the decline in
recent months, placing greater upward pressure on values. First-time buyers
are driving freehold housing sales at the $600,000 price point, while those
looking at more affordable alternatives are considering condominiums starting
at substantially less. Balanced market conditions prevail overall. Pent-up
demand has also been building, with local purchasers and international
investors both active in the market. The upcoming Olympics, and the completion
of the much anticipated Canada Line this Fall are expected to further bolster
the cautious optimism characteristic of the Greater Vancouver market at
present. Home buying activity, as a result, is forecast to continue at a
healthy pace for the remainder of the year, with year-end sales slightly ahead
of 2008 levels.Calgary
-------Balanced conditions have returned to Calgary's resale housing market.
Strengthening momentum - residential sales at over 3,000 units were up in
double-digit territory in June -has already begun to place upward pressure on
prices in the entry level. With increasing competition among first-time
buyers, the supply of starter homes is tightening. Buyers who moved in spite
of doom and gloom forecasts in the Fall, Winter, and early Spring realized
considerable savings, while those who hesitated are discovering it has cost
them. Multiple offers are re-emerging in a few choice neighbourhoods on
well-priced product, although there are still a few good deals to be had in
the mid-range. Prices on the whole, however, are stabilizing. Signs of a
transitionally stronger market include rising sales-to-new listings ratios,
shorter days on market, and fewer incentives from vendors/builders. Activity
is expected to remain better than average this summer, as those who paused
over the past six months dive back in before interest rates rise. Momentum
will continue to build into the fall, with overall 2009 sales edging slightly
ahead of 2008 levels by year-end.Edmonton
--------The residential resale market is springing back to life in Edmonton, with
sales setting a new record for the month (June) and the third best month for
unit sales in MLS history. While activity has been steadily improving in the
second quarter, the heated momentum has yet to put any serious pressure on
average price, which, although rebounding, remains down year-over-year. The
market has shifted, moving from buyer's territory to more balanced conditions,
prompted by the recent flurry in home buying and the slow return to more
traditional inventory levels. Stability will characterize Edmonton's housing
sector going forward, with low interest rates, rising consumer confidence
levels and affordability the impetus behind healthy demand. The frenzied
climate of previous upswings will be conspicuously absent. While multiple
offers have re-emerged - particularly in the $300,000 to $450,000 price point
- they will continue to be the exception rather than the rule, driving sales
price close to, but not typically over, asking price. Demand is expected to
remain strong in the months ahead, bolstered by looming interest rate hikes
and glimmers of positive news on the economic horizon, as consumers regain a
cautious optimism.Regina
------Positive economic performance continues to bolster home buying activity
in Regina. Despite a 10 per cent decline in year-to-date sales (1,778 vs.
1,977 units) from levels reported January to June 2008, the gap is narrowing
as purchasers move to take advantage of low interest rates and greater
affordability. Sales in May and June were up in double-digit territory over
one year ago and momentum is building. First-time buyers remain the most
active segment of the market, sparking sales under $275,000. Inventory levels
have been responsible for the steady upward pressure on housing values in the
lower-end of the market. Limited supply of starter product in Regina has most
properties in good condition, in desirable communities, moving quickly - some
in multiple offers. The top-end of the market has also seen some bounce back,
with sales between $400,000 and $450,000 up about 25 per cent over one year
ago.
Condominium sales, however, have softened year-over-year, with an
oversupply of product currently listed for sale. Although conditions currently
favour the buyer, the market is transitioning. More balanced conditions are
expected to emerge in the months ahead. Given a continuation of current
economic fundamentals, the number of homes sold in Regina by year-end is
expected to match 2008 levels.Greater Toronto Area
--------------------Pent-up demand for residential housing continues to fuel home buying
activity across the Greater Toronto Area. The number of homes sold in June -
at 10,955 -- came close to the historic record of 11,146 units set in May
2007, while pressure on average price is sending housing values higher than
one year ago. Although balanced market conditions prevail, there are those
communities that have clearly transitioned into sellers markets. Inventory is
key, with the number of properties currently listed for sale down
approximately 30 per cent from 2008 levels. Over the past six weeks, momentum
has been building, with demand strongest for homes priced between $300,000 and
$600,000. Multiple offers are once again commonplace, especially in the city's
coveted hot pocket neighbourhoods. Affordability - in terms of low interest
rates and housing values - has been the impetus for first-time buyers. Luxury
home sales have also experienced solid demand in recent months, with 291 homes
changing hands over the $1 million price point in June - a new record. The
threat of higher interest rates and home prices are expected to stimulate a
flurry of home-buying activity in the months ahead. By year-end, sales are
forecast to exceed 2008 levels.Ottawa
------Solid economic fundamentals in the nation's capital continue to prop up
housing activity. Year-to-date sales for January to June are slightly ahead of
2008 levels, with the number of properties sold in June (1,895) up 12.5 per
cent over one year ago - the third consecutive record setting month. Pent-up
demand has been a major factor, with purchasers who put their home buying
decisions on hold during the late fall and early winter now entering the
market en masse. As a result, the balanced market that prevailed in recent
months is now shifting in favour of the seller. Multiple offers are occurring
on desirable properties in virtually every price range. Inventory levels,
which peaked in April, are now falling. With less product on the market,
certain segments are experiencing serious shortages-in fact, single family
homes priced between $275,000 to $375,000 are few and far between. In the past
four to six weeks, the upper-end has also started to rebound as all segments
of the market work in tandem. While the threat of an upcoming election will
have some impact on the market, healthy sales activity is expected to continue
throughout the remainder of the year, with sales ahead of 2008 levels.Halifax-Dartmouth
-----------------Improved purchasing power, combined with the threat of rising interest
rates, effectively spurred fence-sitters back into the resale housing market
in June, halting the trend of double-digit declines in sales. The number of
homes sold was up five per cent to 805 units in June 2009, compared to one
year ago.
Despite the increased momentum, buyers remain firmly in the driver's
seat, benefiting from increased inventory and negotiating muscle, as motivated
vendors adjust pricing to position their homes more competitively. Although
sales remain down year-over-year, the gap is narrowing. Affordability and the
stability of Halifax-Dartmouth's relocation market continue to prop up
activity, and first-time buyers remain the driving force. Opportunity exists
for purchasers in the mid-to-upper price ranges, where demand and conditions
have generally been softer. Consumer confidence is strengthening once again.
With the upswing expected to extend into the fall, more balanced market
conditions are forecast to emerge, and Halifax-Dartmouth may once again find
itself a market in transition.St. John's
----------Strong consumer confidence, buoyed by a vibrant local economy and a
healthy employment picture, has kept St. John's real estate engine moving at a
steady clip. With billions of dollars in capital works projects planned or
underway, in-migration remains positive and demand for resale housing
continues to be solid. Improving inventory levels have shifted the market
slightly into buyers territory, giving purchasers the necessary traction to
make their moves. The threat of interest rate hikes has further stimulated
home buying activity, pushing fence-sitters off the sidelines and into action.
Residential sales in June 2009 (354 units) are slightly ahead of June 2008
(351 units) figures. The year-to-date average price recorded a 24 per cent
increase to $211,221, compared to $170,500 for the same time period last year,
bolstered by greater momentum in the mid-range. Corporate transfers have been
a significant stimulus. Entry-level homes, priced between $100,000 and
$200,000, are being snapped up at an unprecedented pace given the sharp
upswing in pricing. Listing inventory levels are higher and the upper-end
continues to move well, supported by the relocation market. Inventory will be
a key factor influencing St. John's housing sector in the months ahead. The
pace is expected to continue, with sales rounding out the year at or ahead of
2007 levels, but below record numbers reported in 2008.
RE/MAX is Canada's leading real estate organization with over 17,000
sales associates situated throughout its more than 677 independently-owned and
operated offices across the country. The RE/MAX franchise network, now in its
36th year, is a global real estate system operating in more than 70 countries.
Over 6,700 independently-owned offices engage nearly 100,000 member sales
associates who lead the industry in professional designations, experience and
production while providing real estate services in residential, commercial,
referral, and asset management. For more information, visit: www.remax.ca
For further information: Elaine Langhout, RE/MAX of Western Canada,
(250) 860-3628; Eva Blay/Charlene McAdam, Point Blank Communications, (416)
781-3911
