By Vir­ginia Galt – Globe and Mail

Con­fi­dence appears to be seep­ing back into the hous­ing mar­ket, with young Cana­di­ans the most opti­mistic that now is a good time to buy, accord­ing to the Royal Bank of Canada’s annual home­own­er­ship survey.

Thirty-year-old David Mor­ris, who owns a con­do­minium in down­town Van­cou­ver, is among those actively plan­ning to pur­chase a home. He’s look­ing to sell his condo and trade up to a house in Vancouver’s trendy Kit­si­lano or North Shore dis­tricts – a move that would have been out of his reach in the over­heated real estate mar­ket of recent years.

Falling prices, low inter­est rates – and the fact that he is get­ting mar­ried at the end of this year – have fac­tored into Mr. Mor­ris’ deci­sion to buy.

“We have made the deci­sion to move for­ward. It’s not a sit­u­a­tion where we’re going to force it, but if we can find the right house for the right price, we have made the deci­sion to get seri­ous about it,” said Mr. Mor­ris, a com­mer­cial real estate broker.

“From a buyer’s per­spec­tive, it’s encour­ag­ing …Now is a good time to come in and find a home that you love, that isn’t going to break the bank.”

In a sur­vey of 2,026 Cana­dian con­sumers, con­ducted in the sec­ond week of Jan­u­ary, the Royal Bank found that 65% of respon­dents believe it is a buy­ers’ mar­ket now.

Of those sur­veyed, 9% said it is “very likely” they will pur­chase a home or con­do­minium in 2009 or 2010, and another 18% rated the prospect of pur­chas­ing a new home as “some­what” likely.

“Addi­tion­ally, almost half indi­cate it makes sense to buy a home now ver­sus wait­ing until next year.”

Young adults and renters are most likely to spark an upsurge in home sales, Royal Bank said in releas­ing its sur­vey results.

“In the under-35 group, 48% said they plan to buy, which is up sharply from 36% last year. Renters also appear to be say­ing they are tired of pay­ing some­one else’s mort­gage pay­ment, with 38% plan­ning to become home­own­ers in the next two years.”

This opti­mism is reflected in the most recent sales sta­tis­tics – the vol­ume of sales in the Toronto area, for instance, was up in Feb­ru­ary as com­pare to Jan­u­ary – Royal Bank pre­dicts that lower prices will lure a grow­ing per­cent­age of Cana­di­ans back into the hous­ing mar­ket in the next two years.

Toronto real estate agents noted that con­sumers do not always fol­low through on their inten­tions – although it is encour­ag­ing that more Cana­di­ans appear to be think­ing about buy­ing homes.

“Inten­tion is the step prior to mak­ing an edu­cated deci­sion… and I’m sure a lot of those peo­ple with inten­tions will move for­ward with pur­chases, it’s just a mat­ter of find­ing the right time,” Mr. van der Wyst said.

Karen Leggett, the Royal Bank’s head of home equity financ­ing, said low mort­gage rates “and favourable hous­ing prices are influ­enc­ing home pur­chase inten­tions this year and may be the rea­son why more Cana­di­ans are poised to pur­chase over the next two years.”

Ms. Leggett said the poll, con­ducted for the Royal Bank by Ipsos Reid, found that the vast major­ity of Cana­di­ans believe that the pur­chase of a home is a good invest­ment. “The cur­rent eco­nomic envi­ron­ment does not appear to have damp­ened Cana­di­ans’ over­all con­fi­dence in the hous­ing mar­ket,” she said.

Mr. van der Wyst said there are good deals to be had, from the buy­ers’ standpoint.

How­ever, he added, many prospec­tive buy­ers – par­tic­u­larly first-time buy­ers – are still uncer­tain about the best time to plunge into the market.

“We tend to hand-hold these first time-buyers, ner­vous first-time buy­ers, espe­cially around here where they know the prices are start­ing to dip – and who knows where they will con­tinue to dip before the recov­ery starts?”

Mr. van der Wyst said that, espe­cially in the cur­rent eco­nomic envi­ron­ment, he screens prospec­tive buy­ers care­fully before tak­ing them to look at prop­er­ties. He noted that the banks are also “pretty strin­gent” in qual­i­fy­ing con­sumers for mortgages.

“Mort­gage rates are at his­toric lows and bor­row­ing money is very, very afford­able. If you have steady employ­ment and you have some finan­cial respon­si­bil­ity along with a good inter­est rate, now is a really, really good time to pur­chase a prop­erty,” said Mr. van der Wyst.

“At this time, employ­ment sta­bil­ity is very impor­tant. It would be really unfor­tu­nate to see some­one lose their job just as they were about to close on a prop­erty,” he said.

A num­ber of lead­ing Cana­dian econ­o­mists have observed that Canada’s ris­ing unem­ploy­ment rate has eroded con­sumer con­fi­dence, and other recent hous­ing fore­casts have been less upbeat than the Royal Bank survey.

Canada Mort­gage and Hous­ing Corp. projects that, in spite of falling prices, the vol­ume of exist­ing home sales is expected to drop by 14.6% in 2009, and then rise by 9.3% in 2010.

Aver­age home prices are fore­cast to fall 5.2% to $287,900 in 2009. Next year, prices are expected to remain flat, accord­ing to the fed­eral hous­ing agency’s forecast.

Com­ment: Remem­ber that those num­bers are national, for the entire coun­try, not for the Toronto area. We have already seen sales vol­ume and prices rise in Feb­ru­ary as com­pared to Jan­u­ary. As the weather gets bet­ter and we head into the spring mar­ket, things are only going to get better.

Ms. Leggett said Royal Bank is not fore­cast­ing “a huge hous­ing rebound, by any stretch,” but there are rea­sons for cau­tious opti­mism that the mar­ket will start to recover later this year and next year.

Fol­low­ing the over­heated mar­ket and bid­ding wars of the past few years, hous­ing is once again becom­ing more afford­able and there are good buy­ing oppor­tu­ni­ties for con­sumers “who have good solid cer­ti­tude around their job prospects and have the finan­cial pic­ture to be able to get into the mar­ket,” Ms. Leggett said.

“Buy­ing inten­tions are one thing. Whether they trans­late into actual pur­chases, obvi­ously time will tell,” she said. “But, anec­do­tally, we are hear­ing that there is height­ened activ­ity …and inter­est in the mar­ket­place overall.”

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