Real estate: flint flicker of optimism

On the eve of what might be the biggest-ever injection of fiscal stimulus into the Canadian economy, and amid projections of trillions of dollars worth of further stimulus globally, there were unexpected flickers of economic light in an otherwise darkening economic outlook.

This included a slight improvement in the still-dark mood of Canadian consumers and, in the U.S., a sharp rebound in deeply depressed home sales. "In a dramatic change of events, the economic data that was released [yesterday] was actually not terrible," noted TD Securities. "In fact, it was somewhat encouraging."

"Consumers indicated that they believed their financial situation was beginning to improve," the Conference Board of Canada said. "Moreover, for the fourth consecutive month, a greater number of respondents said now was a good time to make a major purchase."

While the Prairie provinces recorded declines in sentiment, Quebec, Atlantic Canada, Ontario and B.C. all saw small gains. However, the 2.5-point increase from December lifted the index to just 70.2, down from nearly 90 last summer and almost 100 a year ago.

"Despite the slight increase, the index remains at levels consistent with those seen during other times of economic recession in Canada," the think-tank said.

A major real-estate firm, in a separate report, blamed the depressed level of consumer confidence, along with the slide into recession, for a slump in home sales and prices in the final quarter of 2008.

"The combination of a global economy in recession and shrinking employment figures did much to dampen consumer confidence, diminish home sales and cause house prices to drop," Royal LePage Real Estate Services said.

But the real-estate giant also released survey results suggesting the market could get a lift from the fiscal stimulus in the budget.

Nearly half of Canadians -- 49 per cent -- agree that the economic stimulus in the budget will have a positive impact on Canada's real-estate market, it said.

"Political actions taking place south of the border are also likely to buoy the country's economic conditions," it said, citing another survey finding that 82 per cent of Canadians agree that the inauguration of U.S. President Barack Obama will have a positive impact on consumer confidence here.

News out of the U.S. that home sales unexpectedly rose 6.5 per cent last month, raised hopes that the deep housing market depression there, which triggered the global recession, may be easing.

(prepared by Eric Beauchesne/Vancouver Province)