According Canadian Real Estate Association housing prices are recovering, with the average resale price in May – skewed by an increase in sales activity in the country's most expensive markets – reaching the highest level on record.

“National resale housing market activity returned to pre-recession levels in May, 2009. The rebound in activity is being led by an increase in transactions in some of the most expensive markets in the country, which is skewing the national average price upward,” CREA said

“The biggest contributors in monthly activity in May compared to April were Toronto, Calgary, Edmonton, Montreal and Vancouver and those are among some of the more expensive [markets] in Canada,” CREA's chief economist Gregory Klump said in an interview.

The national average resale price of $319,757 “was up four-tenths of a percentage point from the previous record set in May, 2008,” CREA said.

CREA reported that, over the past four months, “the national …residential average price has recovered 16.4 per cent from the low in January.”

On a seasonally adjusted basis, CREA reported that 37,649 homes changed hands in May – the fourth consecutive monthly increase. This was down 2.2 per cent from May, 2008, as the year-over-year rate of decline moderated.

Mr. Klump characterized the pickup in real estate market activity as more than the typical spring bounce.

There has been a “much-stronger-than-normal seasonal increase in activity, and that's driving up seasonally-adjusted activity for sure,” Mr. Klump said.

The number of new listings is down 19 per cent on a seasonally adjusted basis from a year earlier, restoring some balance to the market, CREA added.

“Strengthening consumer confidence, low interest rates and improved affordability are drawing buyers into the housing market across Canada,” CREA president Dale Ripplinger, a Regina real estate broker, said in a statement.

Mr. Klump said inventory levels are still high in many markets, “but fewer new listings and rising sales activity suggests that the selection of homes available for sale may shrink as the year progresses.

“The supply of homes up for sale needs to be drawn down further before average price increases become more widespread among local markets,” Mr. Klump said.

“The more expensive markets in Canada that dove at the end of last year and skewed the average price lower… are recovering and, because those are higher-priced markets, that's skewing the average back up,” Mr. Klump said.

Toronto-Dominion Bank economist Millan Mulraine said that, over all, the report on May resale activity “was a very favourable report on the state of the Canadian housing market, as it suggests that the buoyancy in home sales since the turn of the year has been sustained…

“This could be an early indication that the correction in the Canadian housing market may be nearing an end,” Mr. Mulraine said in a research note.

Bank of Montreal economist Douglas Porter said the housing market, while healthier than it had been, is not in full recovery mode yet.

“Low borrowing costs, more affordable prices in many markets and some pent-up demand after the fall/winter sales freeze have provided some heavy duty support for housing,” Mr. Porter said in a research note.

“However, even with these positives, further gains will be much tougher to come by, especially with employment continuing to sag,” he said.

“The housing market is not about to go off to the races, even if it has been pulled back from the brink.”

The global economic downturn is a mixed blessing for home buyers - if you're lucky enough to hang on to your job, you should be in a much better position to buy a house, according to a report released Thursday by RBC Economics.

"Declining consumer confidence amid dimming employment prospects and the turmoil in credit markets have had a predictable impact on Canada's housing markets -- home sales have dropped, prices have given into intense downward pressure and residential construction has slowed substantially," said RBC senior economist Robert Hogue, the report's author.

Continuing economic troubles through spring, the key home-buying season, "will put the entire housing sector to the test in coming months," he said.

While Western Canada felt the downturn first, a slowed housing market - spurred by tighter lending conditions and a general reluctance on the part of consumers to spend on big-ticket items--has now spread across the country.

But if slow sales and lower prices are bad news for home sellers and developers, they're music to the ears of people looking to buy, because they are making homes more affordable, according to RBC.

The RBC affordability measure determines the percentage of pre-tax household income that is needed to own a home - to pay the mortgage, taxes and utilities.

Those costs improved at the national level by 2.3 to 3.5 percentage points in the fourth quarter from the previous quarter across all housing categories, the report said. The detached bungalow moved to 43.7%, the standard townhouse to 35.4%, the standard condo to 30.1% and the standard two-storey home to 50%.

The higher the reading, the more expensive it is to own a home; in this scenario, the ownership costs for a two-storey home would eat up 50% of pre-tax income.

Lower mortgage rates were the principal reason for the improvement across the country, though rising income was also a factor, the report said.

"Low mortgage rates and persisting downward pressure on housing prices will continue to help repair affordability although slowing income growth will act as a restraint," said Hogue.

Quebec is the most affordable province for buyers who are in the market for the average bungalow, while Montreal and Edmonton are the most affordable of the big cities, according to RBC.

DETACHED BUNGALOWS:

Average price / %change

Canada $296,200 -0.1

B.C. $480,000 -2.8

Alberta $345,000 -6.1

Saskatchewan $288,100 9.4

Manitoba $214,300 2.6

Ontario $311,900 0.9

Quebec $190,600 1.8

Atlantic $181,600 5.5

Toronto $428,100 0.3

Montreal $236,700 1.8

Vancouver $576,300 -4.6

Ottawa $321,300 4.1

Calgary $410,300 -4.5

Edmonton $329,200 -8.0

canada.com

When the Toronto and GTA housing market was hot, bidding wars forced many buyers to put in offers without conditions to increase their chances of being accepted. This, combined with unprecedented increases in home prices, scared many first-time buyers out of the market.

But the economic downturn changed all that. As housing prices fell and lenders lowered their mortgage rates to attract borrowers, the Toronto market became much more attractive to people looking to buy their first homes.

The average mortgage payment has fallen by one-third or $600 a month from its peak.

We expect resale prices to fall moderately further this year. We look for the housing market to correct further this year but not crash.  And the average time it took to sell a home in Toronto dropped from 45 days in February to 39 days in March.

There's a fair amount of evidence out there that the market has bottomed and is starting to come back. The best time to buy is now!

If you want to know more about Toronto and GTA real estate market, call Alex at (416) 723-9383.

      While much of the North American housing market has taken a hit over the last year, one market is showing promise for home buyers - the Toronto condominium market.

      While TheStar.com reports that overall Canadian starts are on the decline for their sixth straight month according to Canada Mortgage and Housing Corp. (CMHC) figures, Toronto starts actually "edged up by 6 per cent to 26,700 units in February compared with the month before." They credit Toronto's housing start growth to the condo market.

     In other words, new condominiums are still being built in the Greater Toronto Area, despite the slow-down nationwide - 36,000 are set to be completed between 2009 and 2010 according to the CMHC. The boom in Toronto condominiums may be good news for home buyers.

      On top of the growth of new condos around Toronto, investors looking to buy and flip the properties are on the decline. Basically, with so much new construction, it has become more difficult to flip existing properties for a profit. Home buyers instead can find brand new condos for the same prices investors paid previously, or even for less. It's the more attractive option. This means the market for Toronto condominiums is increasingly becoming a buyer's market as the supply starts to outgrow the demand."

      Where investors may still have an edge is in the rental market. The Toronto Real Estate Board reported that in the last quarter of 2008, as people were buying fewer homes, rentals increased 30 per cent over the same period in 2007. That consisted of 3433 rentals of condominium apartments and townhouses in the Greater Toronto Area.

     If you want to know more about Toronto condo market, call Alex at (416) 723-9383.

     More real estate news here -  http://torontorealestate.wordpress.com/

The median price in February was $312,900 from the $324,000 recorded during February of 2008.

CMHC says Housing Starts in January were only 153,500 Units
Until recently, Canadians had been taking comfort in a high level of monthly housing starts long after they began their decline in the United States. Over the past three months, however, circumstances have changed. Canada Mortgage and Housing Corporation (CMHC) reports that national starts in the latest month, January 2009, were only 153,500 units, on an annualized basis. This is a big step downward from the approximately 175,000-unit levels recorded in November and December and the 200,000-plus figures recorded consistently before that.

A Long Struggle for the U.S. Economy
For the U.S., the current economic hard times are an accumulation of forces that have been gathering over several years. Home price speculation and starts peaked in January 2006 leading to the sub-prime mortgage crisis that reared up in August 2007. The period since then has been characterized by falling home prices, banking sector failures, the credit crunch, auto sales declines and month-over-month employment drops that have added up to nearly four million.

A Delayed Reaction for Canada
Canada is only lately experiencing the same kinds of problems. For this nation, the slide was really brought home by the crash in equity prices in late September of last year. Since then, Canada has been playing catch-up on the downside, with jobs dropping precipitously and commodity markets in full retreat. Housing starts are only the latest indicator of how quickly and dramatically the recession is gaining a foothold.

High Inventory Levels and Job Concerns also Undercut Housing
Furthermore, based on unsold inventory levels, there is no reason to expect that the housing starts picture will reverse any time soon. Unsold inventories have been moving out of line with underlying demand for some time. The level of unsold multiples has moved up to double what it should be. Unsold singles are too high by about 75%.

Finally, there is the most important consideration of all. While prices have been moderating in many major markets and mortgage rates are near record lows, these positives with respect to affordability are being overwhelmed by concerns about employment. People do not buy new homes when they are worried about their jobs. Saturation media coverage of the recession and job cuts by major firms across many sectors is simply dealing too many body blows to home-buying confidence.

Gloomy economic predictions are making us a lot more depressed than we need to be. That's a view expressed by several policy analysts in the latest issue of Policy Options, a Montreal-based journal.With so much attention in Canada paid to American news, it's easy to see why Canadians have been spooked.

But while things are difficult here -- as this week's news of 129,000 lost jobs in January underscored -- the writers argue Canada will experience the current global recession much differently than the United States will. Unlike Canadians, Americans have used home equity wealth to support consumer spending. Plagued by the sub-prime mortgage mess, that wealth declined nearly 15 per cent since 2007.

In Canada, the housing sector is healthier. In fact, residential mortgage delinquency is on the decline. Besides which, Canadian consumer spending has been supported by income growth, rather than home equity. Also, while the U.S. personal savings rate has averaged below one per cent of disposable income since 2005, Canadians -- with average savings between two and three per cent -- have more cash to sustain spending during a recession.

Economist Jeremy Leonard acknowledges that Canada is hurt whenever U.S. market demand declines because we export so much south. But the decline has occurred mainly in the manufacturing sector. And while this sector accounts for the lion's share of exports to the U.S., manufacturing represents only 15 per cent of Canada's overall GDP. The story is different when it comes to the commodities sector, which has fuelled the boom in Canada's economy in recent years. That sector has lately flattened but will certainly revive.

Canada's longer term outlook looks positive, asserts Leonard, with emerging markets such as Brazil, India and China continuing their development. These countries, at an early stage in their economic evolution, "tend to see per-capita consumption of lumber, metals, crude oil and other commodities increase sharply as the infrastructure of an industrial economy is built."

Canada's recession will be both "shorter and shallower" than the one in the States.The message for Canadians would appear to be "Shed a tear for the Americans and perk up."

If you want to know more, go here - http://torontorealestate.wordpress.com/ or here - http://activerain.com/amalkhass

Toronto real estate - http://www.torontogreathomes.com/

The average price in December 2008 came in at $361,415, compared to $394,931 last year, and $336,217 in December 2006. For 2008 as a whole, prices averaged $379,347, compared to the $376,236 recorded in 2007, and $351,941 recorded in 2006.

The City of Toronto (416) recorded 1,105 sales in December 2008, compared to 2,302 in December 2007 and 1,827 in December 2006. For all of 2008, there were 29,878 sales, compared to 39,052 in 2007 and 34,404 in 2006.
The average price in the city was $387,482 compared to the $425,842 recorded in December 2007 and the $350,139 recorded in December 2006. For all of 2008 the average price was $410,271. In 2007 the comparable figure was $412,480, and in 2006 $378,776.

The 905 area saw 1,472 sales in December 2008, from 2,344 in December 2007 and 2,620 in December 2006. For all of 2008, there were 44,674 sales in this region, versus 54,141 in 2007 and 48,680 in 2006.
The average price in the 905 area was $341,847 in December 2008, compared to $360,307 in 2007 and $326,509 in 2006. For all of 2008, the average price was $358,665, as compared to $350,092 in 2007 and $332,976 in 2006.

Breaking down the total, 993 sales were reported in TREB’s 28 West districts and the average price was $338,855; 473 sales were reported in the 14 Central districts and the average price was $479,095; 491 sales were reported in the 23 North districts and the average price was $381,975; and 620 sales were reported in TREB’s 21 East districts and the average price was $291,488.

The median price for December 2008 was $305,000, compared to $320,950 in 2007 and $290,000 in 2006. For all of 2008, the Median was $325,000, as opposed to $320,950 in 2007 and $299,000 in 2006.

Prices fell 0.3 percent from October, in line with market expectations. That knocked down the year-on-year price increase to 0.7 percent from 1.5 percent in the previous month -- the lowest since August 1999.

Every major city west of Winnipeg, Manitoba posted flat or falling prices in the month.

Compared with a year earlier, Statscan reported price declines in Calgary, Edmonton, Vancouver and Victoria as those markets cooled from their previous sizzling pace of price growth. Prices in central and eastern Canada rose in the same period.

While the housing market in Canada is softening alongside the overall economy, economists have ruled out a U.S-style meltdown largely because of the country's more conservative mortgage lending practices.

In the City of Toronto, there were 2,136 sales, with sales activity down 38% from the 3,455 transactions recorded last October. In the 905 Region 3,019 sales were recorded, with sales activity down 32% from a year ago when 4,460 homes changed hands.

With 68,570 transactions to date this year, sales are within 16% of the 81,563 transactions noted a year ago. The 2007 market referred to was a record breaking year with each month breaking records for the entire year. Putting this into perspective, 2008 figures are indicative of a return to a more balanced market.

In the City of Toronto, the current average price of a home was $376,896, down 13% from last October’s average of $434,022 and within 3% of the October 2006 average of $386,807.

In the 905 Region homes are selling for an average price of $336,049, a decline of 8% from October 2007’s average of $364,142. Prices in this area however, remain one per cent higher than the October 2006 average of $332,822.

The ease with which a Canadian could sell a home tightened up sharply last month, as the global financial crisis sapped consumer confidence and economic growth slowed. Reflecting this, Canada's costliest cities for housing have suffered significant price declines from this time last year.

From Toronto to Vancouver, the country's highest-priced markets are witnessing a significant drop in average selling prices, as much as 10 per cent in Toronto. In cities like Montreal and Ottawa, however, prices never really soared and there was very little change over the past year.

According to new numbers from the Canadian Real Estate Association, the number of homes sold in October plunged by 14 per cent in October, to the lowest level in more than six years. The group also said the average Canadian selling price fell by 9.9 per cent from a year earlier, although this is not a good guide to reality.

While the phenomenon of falling sales and prices is a real one, there's good reason to think that prices are down by much less than the official statistics.

That's because price data from the national association and its local real-estate boards are simply an average of all selling prices, with little or no adjustment for the location or value of homes sold. That distorts price changes when conditions vary sharply from one city to another, worries Douglas Porter, deputy chief economist at BMO Capital Markets.

Take this example: if you had lunch at a restaurant most days last year, but decided to bring a sandwich most days this year, your average cost of lunch would drop from maybe $15 a day to maybe $5. But that wouldn't tell you much about the price of either a restaurant lunch or a sandwich - just that you had more of one last year and more of another this year.

There's evidence that exactly this problem is beginning to have a strong effect on the Canadian numbers for average home prices. In Toronto and Calgary, which are the next most-expensive markets in the country, transactions also fell off sharply, down 35 per cent in Toronto and 20 per cent in Calgary.

The result: high-priced cities that loomed large in the statistics a year ago had shrunk to a much smaller weight in this year's calculation, lowering the average Canadian price without telling us anything much about the price of a particular kind of home in a particular city.

The real-estate association tried to adjust for this problem by adjusting its data to reflect the number of homes in each province it used in the calculation. This slashed the price drop in half, to five per cent.

And even this adjustment probably didn't catch all of the distortion created by huge drops in sales activity in Canada's costliest cities - Vancouver, Calgary and Toronto - and much smaller declines in cheaper ones.

This doesn't mean that prices aren't falling. Even in Montreal, which has the strongest market of any big city, the average price has edged down about one per cent in the past year. Real-estate board figures suggest drops of nine per cent in Vancouver and 10 per cent in Toronto.

Analysts expect national average prices to keep dropping - maybe five per cent more, but nobody really knows - as a slumping world economy drags Canada into a mild downturn over the coming months.

But this isn't a U.S-style meltdown of the kind that - using more reliable price numbers - has collapsed the average U.S. home value by 20 per cent over the past two years, with maybe another 10-per-cent decline to come.

Canada is hitting an economic rough patch, but it doesn't have a housing market undermined by mortgage fraud and crumbling financial institutions. What it does have is an economic slowdown that will mostly squeeze the most overvalued homes in the most overvalued cities.

If you need to know more about Toronto prices call Realtor Alex at (416) 723-9383.

TD, a unit of Toronto-Dominion Bank argued in a report that home prices fell 1.3 percent in major Canadian markets in September, not the dramatic 6.2 percent drop that was reported by the Canadian Real Estate Association (CREA) last week.

CREA said the average house price fell to C$315,461 (about $252,000), dragged down by sales declines in Vancouver and Victoria, British Columbia, which offset rebounds in Calgary and Edmonton, Alberta. CREA said the fall came despite year-over-year gains in average home prices in 17 of 25 major Canadian markets.

TD crunched its own numbers and applied a weighting to each major city to fix "compositional shifts", which it said were behind the distorted CREA view. It said the association has acknowledged the problem.

For example, if Vancouver was the only city that reported sales in one month, and the next month Montreal was the only city that reported, then it might seem that prices had fallen in half because Montreal prices are much less expensive than those in Vancouver.

TD fixed the weight of each city to year-earlier sales levels as of September 2007.

"We wanted to get rid of the whole compositional issue. We really just controlled for the allocation. When we did that we ended up with a 1 percent drop instead of a 6 percent drop," said Eric Lascelles, chief economics and rates strategist at TD Securities.

"That's not catastrophically different, but to me that's a number that makes more sense. Yes the housing market is correcting moderately but it does not have the making of a U.S.-style correction."

He said Canadian housing starts may fall below the 200,000 mark, home prices will continue to correct in some inflated cities, but there is no need to brace for big delinquencies or a hard drop in prices.

Canadian housing data has shown signs of softness but nowhere near the slump that hit that United States, stemming from a crisis in the subprime mortgage sector.

reuters.com

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