Canada's hot housing market to continue through mid-2010

Canada has moved back into a seller's market and will remain "unusually strong" through the first half of 2010 as economic conditions improve and low interest rates spur demand, according to Royal LePage's Market Survey Forecast and House Price Survey released Thursday.


"The Canadian real estate market enters 2010 with considerable momentum from an unusually strong finish to the previous year," Phil Soper, president and chief executive of Royal LePage Real Estate Services, wrote in a statement. "The stimulus effect of low borrowing costs has contributed to a sharp rise in demand that has driven activity levels to new highs. This demand, coupled with a typical seasonal undersupply of homes for sale, should cause home prices to continue to appreciate significantly during the early months of the year."


The report comes hard on the heels of several others that show the market continuing to gather steam.


In early December, the Canadian Real Estate Association said sales of existing homes surged 73 per cent year over year in November, and that the average sale price has soared 19 per cent. On Wednesday, reports showed Toronto home sales shot up 115 per cent in December and that prices had gained 14 per cent year over year. More of the same is ahead, other reports have stated.


But Soper said the market's apparent froth should ease in the second half of 2010 as supply of listed homes increases and higher interest rates temper rising home prices.


After falling in late 2008 and early 2009, house prices in Canada appreciated in late 2009. In the last quarter of 2009, the average price of detached bungalows rose six per cent to $315,055 compared to the same quarter in 2008. The price of standard two-storey homes rose 5.2 per cent to $353,026, and the price of a standard condominium rose 6.4 per cent to $205,756.


The survey, which includes information on seven types of housing in more than 250 Canadian neighbourhoods, also suggested regions that saw the biggest declines during the recession are now showing marked gains, including Toronto and Vancouver.


A report released Wednesday by the Toronto Real Estate Board (TREB) showed existing home sales there rose 115 per cent in December compared to the same month a year earlier.


"Granted, last December was the absolute low for sales activity in the city this cycle," wrote Robert Kavcic in a note about the board's report.


"(There is) too much cheap money chasing too few goods."

(prepared by Julie Fortier/Financial Post/Vancouver Province)