Toronto real estate. TORONTO HOUSING MARKET IS RECOVERING

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.”