With the increasingly hot Toronto real estate market actually breaking sales records in June, and the pace of home sales gaining traction again in other parts of the country, there are definitive signs that Canada's largest markets for resale home homes are into a recovery. I was surprised to hear from friends in Winnipeg and Calgary this week that they have been struggling to find a home in the $350-450,000 range, since "all the nice ones" in the neighbourhoods they want are selling quickly in multiple offers (which is happening even more intensely in several popular Toronto neighbourhoods).
On this topic of strengthening real estate markets across Canada, RE/MAX Ontario-Atlantic Canada released the following analysis on Monday:
Recovery underway in key Canadian markets ends buyer dominance in resale housing, says RE/MAX
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, according to a report issued by 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 led the charge—with June sales among the highest in history for Toronto and Greater Vancouver real estate boards. 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.
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. 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.
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.
While sales are the leading indicator, there are other clear signals that recovery is indeed underway. 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.
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.