Recession ... what recession?
Real-estate sales across the country set a new record last month when the national MLS average sale price reached the highest monthly level on record. Sales activity in the resale market also increased for the fourth month in a row. That's a sharp contrast to the economic downturn we keep hearing about.
With continued low interest rates and confidence that the economy will turn around, the real-estate market in Canada is on an upswing. That's a complete shift from our neighbours to the south. The housing market in the U.S. continues its downward spiral, leaving people wondering if that market will ever recover.
In May, the average sale price for a home in Canada was $319,757, up from $318,391 one year ago. In Manitoba, the average sale price rose from $203,671 in May 2008 to $204,276 in May 2009. That's despite the fact that the Canadian economy has taken a sharp downturn and we've hit a recession in the last 12 months.
The impact of the recession is easing up on the real-estate market, as sales activity across the country returned to pre-recession levels in May. According to the Canadian Real Estate Association, which represents more than 96,000 realtors working through more than 100 real estate boards and associations across Canada, the national MLS residential average price has recovered by 16.4 per cent from the low it reached at the beginning of the year.
"Sales activity is now closer to the pre-recession peak than it is to the recent low point reached last January," says Dale Ripplinger, president of CREA. "Strengthening consumer confidence, low interest rates and improved affordability are drawing buyers to the housing market across Canada."
That's certainly good news for sellers, especially in the upper brackets of the real estate market. According to CREA, the upswing in activity is being led by an increase in transactions in some of the most expensive markets in the country. With more higher-priced houses selling, that's skewing the national average price upward.
There's also a lot more activity in the real-estate market in general these days.
"Fueled by a string of monthly increases in activity, the number of transactions in May reached the highest point since July 2008," said Gregory Klump, CREA's chief economist.
That could change as we enter the summer months and move into the fall market. The spring is traditionally the busiest season for real estate sales.
According to Klump, the number of houses for sale in many markets across the country is still high, but there are fewer new listings popping up. With rising sales activity, he says the number of properties on the market may decrease as the year progresses. The number of new residential listings dropped 19 per cent in May compared to one year ago.
"The supply of homes up for sale needs to be drawn down further before average price increases become more widespread among local markets," says Klump.
