Re/Max expects 'heated' sales this spring
Published Thursday, March 22, 2012 9:29AM EDT
Last Updated Saturday, May 19, 2012 7:49AM EDT
MISSISSAUGA, Ont. - Major Canadian housing markets have continued to show "exceptional resiliency" so far this year, setting the stage for a busy spring, according to a major Canadian real estate organization.
In its market trends reports, Re/Max said its survey has found that 12 of 15 Canadian centres, or 80 per cent, reported sales activity in January and February that was ahead of last year's levels.
More than half of the cities reported double-digit increases, "with the strong demand and diminished supply setting the stage for a heated spring 2012."
Re/Max said low interest rates, coupled with strong consumer confidence levels and a mild winter played a significant role in the upswing, ushering in an early start to the spring market.
The Re/Max finding of strong early-year sales was in line with those released a week ago by the Canadian Real Estate Association, which also reported an unexpectedly strong market in February.
CREA said actual home sales over its Multiple Listing Service increased 8.6 per cent overall to 36,937 in February compared with February 2010, defying even its own earlier predictions of a cooling market.
Industry watchers who are closely monitoring home prices have suggested Canada's real estate market, which has been fuelled by low mortgage rates since the recession, will soon cool off, but many predict a so-called "soft landing."
Others have called for a more drastic decline in sales and home prices, saying that the market is overheated, creating a housing bubble that could soon burst.
Re/Max found that average prices climbed in 14 of 15 markets in January and February, although price appreciation was more tempered, with only three markets -- Toronto, Winnipeg and St. John's, N.L. -- posting gains in excess of 10 per cent.
However, tighter inventory levels at entry-level price points have sparked bidding wars -- particularly in the Winnipeg and the Greater Toronto Area -- with similar conditions starting to emerge in Saskatoon, Regina, London-St. Thomas, Hamilton-Burlington, Ottawa, St. John's and Halifax-Dartmouth.
"Given the current economic climate, the strength of the country's housing market clearly reflects the value Canadians place on home ownership," said Michael Polzler, executive vice-president of Re/Max.
In terms of sales volumes, the best performing markets heading into the traditionally busy spring period were Halifax-Dartmouth, up 35 per cent, Saskatoon (21 per cent), Saint John, N.B., (20 per cent), Regina (16 per cent), St. John's (12.5 per cent), Greater Toronto Area (12 per cent) London-St. Thomas (11 per cent) and Edmonton (11 per cent).
Only Vancouver, Kitchener-Waterloo, and Winnipeg have experienced softening in housing activity so far this year. Sales are down 16 per cent in the Greater Vancouver, 4.5 per cent in Kitchener-Waterloo, and Winnipeg down 0.2 per cent.
Meanwhile, despite expectations of continuing strong sales, prices gains are likely to be "much more moderate that in years past," said Elton Ash, regional vice-president for Re/Max in Western Canada.
"We expect this will remain the trend moving forward, in line with the Canadian economy, as GDP growth also moves ahead at a more subdued pace."
However, Ash said local conditions vary, with inventory shortages driving prices in some markets while others, such as in the case of Saskatchewan and Newfoundland, the local economy has shown extraordinary strength.
"On the whole, this is a very stable and healthy housing market in line with traditional norms, with few exceptions," he said.
Re/Max said first-time buyers have been driving demand in both the smaller and major markets, in turn sparking strong sales activity among move-up purchasers at higher price points.
"As a result, the upper-end of the market has also held up well. There's no question that the spring 2012 market will see all segments working in tandem."
Re/Max is one of Canada's leading real estate organizations with more than 18,700 sales associates at over 720 independently-owned and operated offices in Canada.