The worst of Canada’s real estate woes appear to be past.
Real estate experts say first-time buyers and Bank of Canada rate cuts have helped restore stability to a real estate market that slumped from late 2008 to early this year, when the worst leg of the global financial crisis battered consumer confidence.
We should be less fearful than we were six months ago, but I don’t think we should be exuberant yet. The real estate markets in Canada are very strong. May numbers were pretty good, and June numbers are even better. It might not be time to party, but we can certainly smile.
Recent data suggest Canada’s real estate market, which weathered the financial crisis much better than its hard-hit U.S. counterpart, has been thawing for several months.
The latest Canadian Real Estate Association data shows May resale home prices rose 0.4% to $319,757, beating the previous record set a year earlier. It was the first year-over-year increase since May last year. And sales activity climbed for a fourth straight month.
The industry group, which represents more than 97,000 real estate brokers and agents, also cut its forecast for a drop in home prices this year and said it expected sales activity to trend higher.
Meanwhile, the Canada Mortgage and Housing Corporation, the national housing agency, forecast in its second-quarter outlook that new home construction is expected to decline to 141,900 units in 2009 but rebound next year.
A stable but unremarkable period for the real estate market is expected this year. And stability is something you can’t overemphasize in terms of its importance for the housing market right now.
Unless the global financial system succumbs to another crisis, analysts expect the Canadian home market is likely to stabilize further.
Activity from first-time buyers appears to be providing support because of stimulative measures by the federal government that allow these buyers to defray closing costs and withdraw more from retirement funds.
The Bank of Canada has also pledged to keep interest rates near zero until mid-2010, which could bolster confidence.
But at least we have a stable market and stable prices, which is something that you need to encourage consumers to buy and sell houses.
————————————————————————————————————
Contact the Jeffrey Team for more information - 416-388-1960
————————————————————————————————————