Residential housing sales via MLS was over 52K across the country in April 2010 which was up 20% over last April 2009. Seasonally adjusted home sales was down 2.6% from March 2010. With talk of the housing market cooling over the next few months and continuing into 2011 due to higher mortgage rates and the introduction of the HST on July 1, 2010 many homeowners entered the market as sellers trying to see if they get out before buyers dry up. This resulted in 99,901 homes listed for sale in April 2010, with the total supply of residential homes listed on the MLS of 236,397.

House prices are still rising however, as the average house price sold on MLS rose 12.2% in April 2010 over last April and was driven by increases in the major markets of Alberta, Ontario and Quebec.

Source: CREA

Source: CREA

Economists had predicted housing starts to increase to approximately 139,000, but with home starts in August jumping more than 12% compared to July, CMHC is confident in the housing market’s economic forecast. Construction companies are benefiting from the rise in house starts as well, as they began work on 14,177 new homes in August for a seasonal adjusted annual rate of 150,400.

According to the CMHC, the seasonally adjusted annual rate of urban starts rose in August by 14% to 131,800 units. Multiple-unit construction rose 23.8% to 77,600 units, and the single-unit sector gained 2.5% to 54,200 units.

Seasonally adjusted annual rates (SAAR) of urban starts increased for many provinces. Here are some housing market highlights over the last month. Urban construction was up:

While an overall increase could be found throughout the country, rural starts were unchanged in August at 18,600 units.
Why the increase in housing starts? Aside from the Canadian housing market showing signs of recovery from the economic downturn, the housing start increase is driven by unit sales and attractive existing home prices. Below is a table detailing the increase in housing starts from across the country between August 2008 and August 2009.

*Information taken from CMHC

In addition to the rise in house starts, sale prices of newly completed and unabsorbed single-detached and semi-detached dwellings have been showing promise for the remainder of 2009 and into 2010.

Resale activity is also up in August from this time last year, especially in Canada’s large metropolis centres. According to the CMHC and multiple listing service (MLS), resale activity rose:

A dramatic 62% increase of overall new home sales in August indicates Canada’s climb out of recession but we are still behind the mark compared to where we were in 2008. As Kelvin Mangaroo, founder of RateSupermarket.ca states, “Regardless of where we were a couple of years ago, the surge in home starts and new home sales indicates a confidence in the real estate market that we have not seen over the last few months. With the increased number of searches we’ve seen done on RateSupermarket.ca, it appears that home buyers are taking note of the deals being offered and the low mortgage rates available, and are looking to take advantage now.”

While housing sales and starts seem to be up in major metropolis cities across Canada, the housing market is still recovering from the economic activity seen over the past 10 months. Even when the labour market officially stabilizes across the country, it will take time for that to result in a consistent increase in spending levels.

Caroline
PR@RateSupermarket.ca

As the economy begins to stabilize and consumer confidence improves, house prices are expected to appreciate slightly in much of eastern and central Canada. Greater than national average price declines are predicted for the western cities that saw the greatest price inflation earlier in the decade, including Edmonton, Calgary and Vancouver.

“Given the grim shape that Canada’s real estate market was in this past winter, the turnaround we have witnessed in the second quarter is really quite remarkable. We believe this improvement represents a sustainable change across the country. While seasonally weaker conditions are to be expected in the fall, the plucky Canadian real estate market is stabilizing and a healthy level of activity is forecast for the second half of 2009,” said Phil Soper, president and chief executive officer, Royal LePage Real Estate Services.

During the second quarter, average house prices across most Canadian markets began to appreciate, recovering from the lows experienced during the winter months. Average national prices remain slightly behind those posted during the same period in 2008. Of the housing types surveyed, the price of detached bungalows declined to $327,964 (-3.5 per cent), two storey property prices decreased to $392,378 (-3.7 per cent), and standard condominiums price points fell slightly to $236,612 (-4.0 per cent), year-over-year.

Soper observed, “With our industry’s busiest quarter behind us, we feel comfortable revising our 2009 forecast to the positive. When the anticipated market decline struck last winter, it was with greater speed and intensity than predicted, but the strength of the rebound was equally surprising. If general economic conditions continue to improve, as we expect they will, 2009 will be characterized as a period of moderate housing market correction after several years of above-average price growth.”

The 2009 national average house price is forecast to decline marginally by 2.0 percent, to $297,500 by end of year and unit sales are projected to fall slightly by 1.0 percent to 430,000.

“Improved affordability, driven by flat or lower home prices and inexpensive mortgage financing, has been the principle catalyst in this recovery. Pent up demand is also a factor in the lift we see in the second quarter numbers. For six months straddling the year’s beginning, buyers stayed away from the market in an understandable, emotional reaction to very unsettled global economic conditions. Canadians appear to be stepping beyond these fears and are once again moving onto and up the home ownership ladder,” stated Soper.

In early 2009, the precipitous drop in unit sales remains the most dramatic indicator of the recession’s impact on Canada’s real estate market. With spring, consumers appeared ready to believe the worst was behind them and returned to the market in force, driving increased activity across each housing type. Couple this with historically low interest rates and leveling unemployment, Canada’s residential real estate market got back on track during the quarter.

Undergoing an inevitable cyclical correction, price adjustments can be seen with marked variances across Canada’s provinces. As expected, British Columbia and Alberta posted the most significant price modifications, as home values in those markets retreated in the wake of several mid-decade years of unsustainable price inflation, and have now evolved to a more balanced state. Prices appear to have stabilized and it is expected that these regions will continue to see improvements into 2010. In particular, the impact of lower home prices has improved affordability to the point that people are buying homes again on the West Coast, where sales activity has increased substantially.

Alternatively in Atlantic Canada, homes continue to appreciate due to strong local economies, which have helped to shelter the region somewhat from the turbulence witnessed in other provinces. As well, the region’s generally moderate home prices have helped keep demand strong. Newfoundland, in particular, stands out as a region that continues to see significant home price appreciation, as supply cannot keep up with the demand driven by vibrant and growing industries such as those in the province’s oil and gas sector.

Meanwhile, home prices in Toronto declined slightly in the second quarter, reflecting the national average trend. In the early spring, it was first-time buyers who triggered the increased activity levels, now those looking to move up are also active in the market. Similar to the situation in other large cities in central Canada, the most desirable neighbourhoods experienced supply shortages, which put upward pressure on prices.

“Looking ahead to the second half of 2009, year-over-year price comparisons will likely appear increasingly more favourable. It is important to remember that the baseline for the latter half of 2008 was unusually low, particularly in the fourth quarter when the full impact of the global financial crisis was felt. Our expectation is that most Canadian regions will experience stable housing prices through into the spring of 2010,” concluded Soper.

Regional Market Summaries

Halifax

In Halifax, a stable economy has contributed to a healthy real estate market where average house prices increased modestly despite a slight dip in sales activity. The market is beginning to pick up following a slow first quarter. Pent up demand will see a return to a more active market in the last half of the 2009 with the anticipation of a slight boost in sales activity and average house prices growing at a leisurely pace.

Montreal

The housing market in Montreal experienced a solid second quarter, with average house prices for most property types expected to increase for the remainder of 2009. Higher inventory levels resulted in balanced market conditions seeing the number of new listings equal to the number of sales. Low interest and unemployment rates will help maintain the strength of the real estate market through to the end of the year.

Ottawa

Ottawa continues to remain a steady market for residential real estate, with sales activity in the second quarter coming out strong from a slow first quarter. Ranked number two among Canada’s large cities for affordable real estate and coupled with low interest rates, all types of buyers were drawn to the market. House prices are expected to remain stable throughout the remainder of year with numbers slightly higher than anticipated.

Toronto

In Toronto, the real estate market witnessed significant second quarter gains. The return of consumer confidence and an upswing in spring market activity brought house prices and unit sales down as buyers emerged to take advantage of affordable properties and low lending rates.
As the market begins its transition from a buyer’s market to a balanced market, with indications of a seller’s market arising, it’s anticipated that the market will stabilize by the end of year.

Winnipeg

Winnipeg’s real estate market has remained relatively resilient in the second quarter with average house prices in key housing segments increasing from the first quarter of 2009. Real estate in Winnipeg is modestly priced when compared to other cities in Canada, creating ideal conditions for buyers in the province. Looking ahead, average house prices are anticipated to stabilize for the remainder of the year.

Regina

Regina’s real estate market started on the road to recovery in the second quarter of 2009 and is expected to further improve through the remainder of the year. An increase in unit sales helped diminish the city’s high inventory levels as buyers are beginning to initiate deals. Recovering manufacturing and resource sectors, new construction activity in Regina, and low interest rates have also helped to improve buyer confidence.

Calgary

With the economic downturn and the oil and gas industry struggling, the housing market in Calgary has been on the decline since 2008, after many years of price inflation at the beginning of the decade. Quarter one of 2009 revealed some signs of price increases and stabilization in certain areas in Calgary, but the second quarter reveals fluctuations in the market. These price fluctuations are occurring across Calgary in all housing types with the market forecast predicting price reductions for the remainder of 2009.

Edmonton

Housing market conditions in Edmonton were characterized by lower inventory levels and moderate house price increases. Buyer demand was strong during the second quarter as most buyers felt a sense of urgency to capitalize on the recent market conditions. This has led to a slight tightening in Edmonton’s housing market with appreciation in average house prices expected for the last half of 2009.

Vancouver

Vancouver’s real estate market stabilized in the second quarter of 2009 following a price correction that started last fall moving towards a balance between supply and demand. Properties priced at, or below, market value are generating multiple offers from buyers. Average house prices throughout the last half of the year are expected to inch upwards, but increases will likely be in the low single digits.

Canadian Annual House Price Changes

Royal LePage’s Q2 2009 House Price Survey shows the following annual change of prices for key housing segments in select national markets:

Canadian Housing Trends

2009 Royal LePage Market Survey Forecast

* Represents all homes in Canada
Source: Royal LePage Real Estate Services.The Canadian Real Estate Association and local real estate boards

So are February statistics from the Canadian Mortgage and Housing Corporation good news or bad?

Well, let’s have a look at some highlights.

Rate of housing starts (seasonally adjusted) in 2009

Rate of housing starts (seasonally adjusted) in 2008

The anomaly to the decrease in housing starts is in Atlantic Canada’s urban centres, where new builds actually increased by 10.8% in February, to 8,200 units. The rest of urban Canada:

So, aside from the struggling economy, what caused the housing starts to drop by nearly 20,000 in February ’09, from the month prior? Well, the CMHC says fewer houses were sold in February, while more were put on the market. New listings in February rose 1.6% to 70,797 units, up from January’s 69,706. The flooded real estate market has given potential buyers more options, and less need to build.

As the economic instability continues, the housing market moves closer and closer to a buyer’s market. That continuing shift resulted in an 8.6% increase in February home sales (28,669) from January (26,388). This rebound pales in comparison to February 2008 though, as the sales in the second month of ’08 were 30.9% higher.

So, while sellers had a better chance of moving their home in February, chances are good they didn’t get the dollars they were hoping for. The average sale price of MLS homes in February dropped 1.3% from January, to $279,598, while the average price is down a whopping 9.1% from February 2008.

As more houses hit the market and builders slow their pace, employees in the construction trade have taken a hard hit, as 43,000 positions were lost in February, continuing a decline that has seen 6.4% of construction workers be let go since October, 2008.

So if you’re in the market to buy, you are firmly in the driver’s seat. Although more homes were sold in February, the average price was lower. Be diligent, shop around and drive a hard bargain – you should be able to find yourself a deal in today’s housing market.

Canadian housing starts rebounded in August, however, experts cautioned to look too much into this as it follows a weak July, the CMHC reported last week.

Analysts had expected 195,000 starts across the country and there was actually a 13% increase to a seasonally adjusted annualized rate of 211,000 units from 186,500 units in July. The majority of the gain was in Ontario, which saw a 81% hike.

Interesting facts:

Some key facts from the article include:

Canada

Alberta

Vancouver

Toronto

Canadian House Prices:

Canadian Housing Sales

Foreign Markets
It looks like the Canadian real estate market has been fairly resilient when compared to other markets around the world, as reported in the Edmonton Journal:

The MLS ® Major Market Residential Summary:
First Half 2008

At an event in Calgary he said:

He also said that despite the government tightening rules on mortgage lending with their announcement last week to stop insuring 40 year and 0% deposit mortgages, the general health of Canadian banks are very good.