Tony Wong – Toronto Star
Alicia Pang quit her banking job just over a year ago to get her realtor’s licence. The timing could have been better.
The real estate market promptly tanked last fall. Dismayed, Pang thought she had made the wrong career choice. But this spring, the market made a surprising U-turn.
“It seemed that we were just talking about the recession yesterday, and now things have rebounded so quickly,” said Pang, a Markham-based agent for Sutton Group-Heritage Realty.
Nationally, Canadian existing-home sales increased 18.5% in August compared with the same time last year, according to figures released yesterday by the Canadian Real Estate Association.
The average price also rose 11.3% from year-ago levels to $324,779 – the highest average ever recorded for the month of August. CREA said the higher prices were the result of demand in the more expensive housing markets, such as Toronto and Vancouver, skewing figures upward.
Canada’s housing market has “fully escaped the clutches of a potentially lengthy, harsh downturn,” said BMO Capital Markets economist Doug Porter.
“Record-low borrowing costs combined with the growing realization that the economic storm is passing have fuelled the remarkable turnaround.”
Pang isn’t complaining about poor sales, but a lack of listings on the market means that buyers are becoming increasingly frustrated.
“The lack of inventory is a huge problem that is forcing prices back up,” Pang said.
“That also has the effect of discouraging buyers.”
Improved demand combined with fewer listings is drawing down inventory in the market. Listings were down 13.3% in August from a year earlier.
However, the number of months of inventory was up slightly in August to five months, from 4.4 months in July.
That is still well below the recessionary peak of 12.8 months in January of this year.
That’s no consolation to buyers. One client saw more than 60 resale homes before deciding to buy a new home from floor plans, said Pang. “He was sick of going into multiple offers.”
Analysts say they expect more listings to appear on the market over the next few months as sellers are encouraged by higher prices.
While sales were up year over year, the month over month figures from July to August declined by 0.6%, snapping a streak of six consecutive monthly gains.
With prices moving higher again, economists wonder how the market can continue to show momentum.
“We believe that Canadian housing market activity in the coming months will be relatively tepid as the sector consolidates gains made since January,” said Millan Mulraine, an economist with TD Securities.
“The gaudy sales growth will be tough to maintain now that prices are moving higher again.”
Nationally, Vancouver was the standout with sales up 117%. The Greater Toronto Area registered a 27% increase.
“The balance of sentiment making big-ticket purchases pushed into positive territory in August for the first time since early last year,” said CREA chief economist Gregory Klump.
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