Housing market on course to record

After three straight months of declining sales, the housing market rebounded in October and is poised to set a new record for activity in 2007.

The Canadian Real Estate Association said yesterday there were 28,966 homes sold last month on a seasonally adjusted basis, up 1.3% from September. The market peaked in June and, despite the uptick last month, was still off its 2007 monthly high.

"It is important Canadians understand the difference between the Canadian and U.S. housing markets," said Ann Bosley, president of CREA, adding there is no panic selling happening here like there is south of the border, where prices are crashing.

Prices across Canada continue to rise, with the average price of a home sold in October reaching a new record of $333,544, a 10.6% increase from a year ago. It was the sixth straight month of year-over-year double digit increases.

CREA, which represents real estate boards across the country, is calling for a gradual slowdown in sales next year but expects records to be set for average price in every province in 2008.

With only 10 months of data, almost a quarter of the country's top 25 markets have already shattered their 2006 totals. Halifax, Kitchener-Waterloo, Regina, Saskatoon, Saint John and St. John's needed only 10 months to eclipse last year's total, and CREA says Toronto and Victoria will do the same by the end of this month.

This year's national sales numbers could get a boost from plans in Toronto to impose a city land-transfer tax. Realtors are already reporting some anecdotal stories about consumers trying to buy a home before Dec. 31 -- the deadline to close a deal and not have to pay the extra city tax.

Based on the average sale price of a home in 2006, Toronto home buyers will face an extra $3,525 bill when the land-transfer tax takes effect on Feb. 1. The same home would also face a $4,175 provincial land-transfer tax. By comparison, Alberta home owners pay about $100 to transfer a home.

"To some extent, there could be a rush in sales," said Mr. Klump. "We will know better at the beginning of next year what effect the land-transfer tax is having."

(prepared by Gary Marr/Financial Post)