John Morrissy, Financial Post Published: Tuesday, June 30, 2009
OTTAWA -- Canadians hoping the economy would finally show signs of life after enduring the worst global decline since the Great Depression were given a rude awakening Tuesday when key data showed the downturn continues, but at least at a slower pace.
The mood south of the border was equally sombre, as an unexpected drop in consumer confidence rattled investors' hopes for any pending economic recovery and sent stock markets tumbling across North America and Europe.
"While the pace of economic contraction is slowing, we're not out of the woods just yet," said CIBC World Markets' Krishen Rangasamy.
The Canadian economy shrank for the ninth consecutive month in April, the federal agency reported, contracting 0.1% in April, after falling by an annualized 5.4% in the first quarter and 3.7% in the fourth quarter of 2008.
While the pace of contraction appeared to slow in April, following the 0.3% annualized drop in March, Rangasamy said the reprieve might prove only temporary, thanks to the closing in May and June of several GM and Chrysler plants.
"You're going to see a big drop in May and June," said Mr. Rangasamy, adding that the 0.1% drop in April "is going to look good by comparison." The Bank of Canada expects the economy to contract another 3.5% in the second quarter of 2009.
Further signs of an economy struggling to prosper were found in data showing manufacturers getting caught in the squeeze between rising costs for materials and prices for their products driven lower by a strong Canadian dollar.
"It's a double whammy for exporters," said Sal Gauteri, senior economist at BMO Capital Markets, referring to a Statistics Canada report showing factory prices falling more than expected in May. "Their input costs are going up, especially for fuel, at the same time that demand for their products remains fairly weak and the dollar remains strong."
The tone for the markets Tuesday was set by the morning release of U.S. consumer confidence numbers that fell in June for the first time in four months. Equities and commodity prices immediately tumbled, shaving about 1% from both the S&P/TSX composite index and Dow Jones industrial average by day's end.
"Optimism is all good, but it's got to be based on something, and the markets were expecting a recovery probably a little too soon," said Mr. Rangasamy.
"Without the U.S. consumer it's difficult to see a strong recovery taking hold any time soon," said Mr. Gauteri. "And if the U.S. consumer stays home, Canadian exports will remain in the tank."
Yet while Tuesday's releases were a sobering reminder that the global recession has yet to be subdued, there were still signs that its grip is weakening.
Douglas Porter, deputy chief economist at BMO Capital Markets, said the "mild drop in April GDP reinforces the point that the worst of the declines for the economy are behind."
Added Mr. Rangasamy:"At the turn of the year, our economy was virtually in free fall, much like the rest of the world, and we've seen evidence that the rate of contraction is slowing, not just in Canada but in many other countries."
And while the outlook for third quarter is negative, most economists are expecting Canadian economic activity to return to growth in the fourth quarter.
Canwest News Service
Monday, July 6, 2009
Monday, June 29, 2009
RIDING THE ... REAL ESTATE ROLLER COASTER
Garry Marr, Financial Post
Heather Harding and her husband, film editor Graham Withers, have been on the real estate sidelines looking for a home for the past 18 months. The Toronto couple, renters, started their search when the market was at the top and every home they looked at was "just too expensive."
But now that prices are finally falling and affordability is increasing, there is another major stumbling block in their search: Job security.
"There just seems to be so much uncertainty. Prices in the range we have been looking at haven't changed all that much, either," said Mr. Withers.
"We keep waiting for the big housing crash," said Ms. Harding.
They look to the situation in the United States and see prices dropping by as much as a third in many markets, but that hasn't happened here. The Canadian Real Estate Association said prices across the country in the first four months of 2009 were down 6.7% compared with a year ago.
"We are looking for more of a deal. And more stability. I work on contracts and my wife just changed jobs," said Mr. Withers. "Unless we are going to get a deal, why would we introduce more uncertainty into our lives?"
That's the real-estate rub: Sales have stalled as vendors refuse to lower prices while buyers sit on the sidelines waiting for a deal after more than a decade of rising prices.
To be sure, the deals have finally begun to materialize, although not from plummeting prices. Rather, record-low interest rates, whether consumers are borrowing long-term or short, are a key factor in the new real-estate affordability.
Consider a $300,000 mortgage. At the 3.75% rate some mortgage brokers claim they can get for a five-year closed mortgage, the monthly payment is $1,537.67, based on a 25-year amortization. A couple of years ago, when the rate was closer to 5.75%, the same mortgage would cost 22% more, or $1,875.07 a month.
Cheap money has created a classic economic battle. In one corner stands the real estate industry, trying to lure buyers with rates so low it is now cheaper to own than to rent. In the other is the skittish consumer who is too focused on job concerns to care about interest rates.
For the first time this decade, the Royal Bank of Canada's Affordability Index, which measures the percentage of household income needed to carry a home, is declining.
"We've seen affordability improve across the board, but especially in some centres where it had deteriorated over the past few years," said Robert Hogue, senior economist with RBC.
Vancouver is one example. At the market peak, almost 80% of pre-tax household income (based on the median household income in the city) was needed to carry a standard two-storey home. The index is based on a 25% down payment, a 25-year amortization and includes the costs of principal and interest, property taxes and utilities.
Vancouver's affordability rating has improved to the 70% range, but so has job uncertainty, according to RBC. The decision to jump into Canada's most expensive city for housing has not gotten easier.
Nationwide, 43.7% of household income is needed to carry a detached bungalow, a decline from 46.6% in the fourth quarter of 2007. When RBC releases its first quarter results later this month, that figure is expected to fall again. The all-time peak in Canada was 52.6% in 1990.
"Consumers still are not jumping into the market en masse because of concerns over job uncertainty," says Mr. Hogue. "The job market continues to show losses. We are talking about a battle between confidence and affordability. This is likely to see-saw for some months ahead."
The real estate industry is busy pumping out the statistics to back up the affordability argument. CREA and others in the industry point to three straight months of improving sales activity, adjusted for seasonality. April sales were 32% above the decade's low point reached in January.
But the numbers still show very slow sales for 2009. April sales were off 9.2% from a year ago, while sales for the first four months of 2009 were down 20.7% from a year earlier.
In Windsor-Essex, ground zero for the Canadian auto industry, housing sales for the year were down 21% from a year ago, while the $152,856 average price of a home has sunk to the fourth lowest among the 25 urban centres CREA tracks.
"There are tons of homes up for sale," said Rick LaPorte president of Canadian Auto Workers local 444 in Windsor. "My house has probably dropped $20,000, maybe $30,000, in the last three years. It's a buyer's market -- as long as you have a job. ... If you have no way of paying for a mortgage, houses can be as cheap as you want." said Mr. LaPorte.
From the real estate industry's perspective, first-time buyers have been the cement that has held this market together. A survey by Royal LePage last month found 86% of potential first-time buyers indicated that low interest rates were a key motivator for buying. Lower prices was the second-biggest reason to purchase, with 81% of potential buyers citing that factor. But 76% of respondents also listed job security as a major factor affecting whether to buy.
The results back up LePage president Phil Soper's assertion that affordability trumps job security in this high-stakes game. "While these consumers appreciate government incentives such as tax credits, greater RSP deduction limits and rebates on home renovations, it is markedly improved affordability that is proving to be the powerful drawing card," he said.
Canadian Imperial Bank of Commerce senior economist Benjamin Tal has his own set of statistics. He say outstanding mortgage debt is rising 8.5% on a year-over-year basis, but the pace of borrowing continues to slow.
"That's the real test of affordability. If affordability was the only measure, you would see mortgage activity accelerating," said Mr. Tal. "Look at the U. S. market, it's extremely affordable. But is anyone buying? If you have no confidence, you are not buying a house, even if interest rates are zero because you cannot afford the risk."
Toronto appraiser Barry Lebow, of Lebow Hicks Ltd., said the Canadian real estate market has nowhere to go but down -- no matter how much cheap money is thrown at consumers. These days he's taking the conservative route when assessing the price of homes because he doesn't want to face the wrath of a bank that has to foreclose on a house that was valued too high and ends up selling for less than the mortgage placed on it.
"There are going to be tremendous changes in real estate... There are just not enough first-time buyers and the ones buying today, those people are not really buyers, You know what they are? They are renters of cheap money, variable-rate mortgages of 2.99%," says Mr. Lebow.
"If mortgage rates were 8% to 9%, these people wouldn't be buying. It's an artificial market. One hiccup in the rates and it's all gone."
Heather Harding and her husband, film editor Graham Withers, have been on the real estate sidelines looking for a home for the past 18 months. The Toronto couple, renters, started their search when the market was at the top and every home they looked at was "just too expensive."
But now that prices are finally falling and affordability is increasing, there is another major stumbling block in their search: Job security.
"There just seems to be so much uncertainty. Prices in the range we have been looking at haven't changed all that much, either," said Mr. Withers.
"We keep waiting for the big housing crash," said Ms. Harding.
They look to the situation in the United States and see prices dropping by as much as a third in many markets, but that hasn't happened here. The Canadian Real Estate Association said prices across the country in the first four months of 2009 were down 6.7% compared with a year ago.
"We are looking for more of a deal. And more stability. I work on contracts and my wife just changed jobs," said Mr. Withers. "Unless we are going to get a deal, why would we introduce more uncertainty into our lives?"
That's the real-estate rub: Sales have stalled as vendors refuse to lower prices while buyers sit on the sidelines waiting for a deal after more than a decade of rising prices.
To be sure, the deals have finally begun to materialize, although not from plummeting prices. Rather, record-low interest rates, whether consumers are borrowing long-term or short, are a key factor in the new real-estate affordability.
Consider a $300,000 mortgage. At the 3.75% rate some mortgage brokers claim they can get for a five-year closed mortgage, the monthly payment is $1,537.67, based on a 25-year amortization. A couple of years ago, when the rate was closer to 5.75%, the same mortgage would cost 22% more, or $1,875.07 a month.
Cheap money has created a classic economic battle. In one corner stands the real estate industry, trying to lure buyers with rates so low it is now cheaper to own than to rent. In the other is the skittish consumer who is too focused on job concerns to care about interest rates.
For the first time this decade, the Royal Bank of Canada's Affordability Index, which measures the percentage of household income needed to carry a home, is declining.
"We've seen affordability improve across the board, but especially in some centres where it had deteriorated over the past few years," said Robert Hogue, senior economist with RBC.
Vancouver is one example. At the market peak, almost 80% of pre-tax household income (based on the median household income in the city) was needed to carry a standard two-storey home. The index is based on a 25% down payment, a 25-year amortization and includes the costs of principal and interest, property taxes and utilities.
Vancouver's affordability rating has improved to the 70% range, but so has job uncertainty, according to RBC. The decision to jump into Canada's most expensive city for housing has not gotten easier.
Nationwide, 43.7% of household income is needed to carry a detached bungalow, a decline from 46.6% in the fourth quarter of 2007. When RBC releases its first quarter results later this month, that figure is expected to fall again. The all-time peak in Canada was 52.6% in 1990.
"Consumers still are not jumping into the market en masse because of concerns over job uncertainty," says Mr. Hogue. "The job market continues to show losses. We are talking about a battle between confidence and affordability. This is likely to see-saw for some months ahead."
The real estate industry is busy pumping out the statistics to back up the affordability argument. CREA and others in the industry point to three straight months of improving sales activity, adjusted for seasonality. April sales were 32% above the decade's low point reached in January.
But the numbers still show very slow sales for 2009. April sales were off 9.2% from a year ago, while sales for the first four months of 2009 were down 20.7% from a year earlier.
In Windsor-Essex, ground zero for the Canadian auto industry, housing sales for the year were down 21% from a year ago, while the $152,856 average price of a home has sunk to the fourth lowest among the 25 urban centres CREA tracks.
"There are tons of homes up for sale," said Rick LaPorte president of Canadian Auto Workers local 444 in Windsor. "My house has probably dropped $20,000, maybe $30,000, in the last three years. It's a buyer's market -- as long as you have a job. ... If you have no way of paying for a mortgage, houses can be as cheap as you want." said Mr. LaPorte.
From the real estate industry's perspective, first-time buyers have been the cement that has held this market together. A survey by Royal LePage last month found 86% of potential first-time buyers indicated that low interest rates were a key motivator for buying. Lower prices was the second-biggest reason to purchase, with 81% of potential buyers citing that factor. But 76% of respondents also listed job security as a major factor affecting whether to buy.
The results back up LePage president Phil Soper's assertion that affordability trumps job security in this high-stakes game. "While these consumers appreciate government incentives such as tax credits, greater RSP deduction limits and rebates on home renovations, it is markedly improved affordability that is proving to be the powerful drawing card," he said.
Canadian Imperial Bank of Commerce senior economist Benjamin Tal has his own set of statistics. He say outstanding mortgage debt is rising 8.5% on a year-over-year basis, but the pace of borrowing continues to slow.
"That's the real test of affordability. If affordability was the only measure, you would see mortgage activity accelerating," said Mr. Tal. "Look at the U. S. market, it's extremely affordable. But is anyone buying? If you have no confidence, you are not buying a house, even if interest rates are zero because you cannot afford the risk."
Toronto appraiser Barry Lebow, of Lebow Hicks Ltd., said the Canadian real estate market has nowhere to go but down -- no matter how much cheap money is thrown at consumers. These days he's taking the conservative route when assessing the price of homes because he doesn't want to face the wrath of a bank that has to foreclose on a house that was valued too high and ends up selling for less than the mortgage placed on it.
"There are going to be tremendous changes in real estate... There are just not enough first-time buyers and the ones buying today, those people are not really buyers, You know what they are? They are renters of cheap money, variable-rate mortgages of 2.99%," says Mr. Lebow.
"If mortgage rates were 8% to 9%, these people wouldn't be buying. It's an artificial market. One hiccup in the rates and it's all gone."
Optimistic but worried
Paul Vieira, Financial Post Published: Thursday, June 11, 2009
The chief executive of Royal Bank of Canada, Gordon Nixon, said the chartered banks are ready to step in where the shadow banking system has withdrawn and make credit available-- at the right price. Mr. Nixon was at the International Economic Forum of the Americas in Montreal, where the future shape of the financial services sector has drawn much attention. Jeffrey Immelt, the CEO of General Electric Co., told delegates on Tuesday that the financial services sector has forever changed and that players will have to deal with more oversight and regulation. Mr. Nixon said that may be the case in the United States, but no drastic changes are likely in store for Canada. He agreed to speak with Financial Post reporter Paul Vieira, who is covering the Forum of the Americas.
Q There is a consensus that the worst is over, but are we not headed for a weak period of economic growth.
A I don't know if I am worried about it, but I do think it will be a muted recovery. The most important thing is for the economy to find bottom. And I do think we are starting to see signs of that occurring. But next year and beyond, anyone who is expecting a dramatic bounce back, in my judgment, will be disappointed. This will be a long and slow recovery.
Q Are you worried about governments trying to overreach with regulation to ensure a crisis such as this one never occurs again?
A It is a much less concern for the Canadian banks than it should be for other institutions in other countries. To some degree, I think our regulatory model is being looked at and being viewed as a good one.
Generally within Canada, the regulatory changes will be more at the margin than they will be in terms of significant restructuring.
When you look at other markets, like the U. S. and Europe, the restructuring will have a more dramatic impact. And there will be significant deleveraging that will occur because the [debt] in their systems is much greater than in Canada.
Q But there's been talk, at this conference, about how governments have to ensure from now on that the financial services sector is regulated in a way to ensure less financial innovation and more credit creation?
A There is no question that credit is extremely important to the functioning of the economy. But that's not just about banks. Credit comes from the bond, equity markets, and the shadow banking system. Many of those areas have collapsed alongside some of the banking systems.
We want to extend credit, we want to grow our balance sheet and loan books, as long as we are doing it on a basis in which we are taking on reasonable risk and getting paid to take bad risk.
The need for banks in the system is probably going to increase going forward.
Q Is there a recovery for the shadow banking system?
A I think it will recover and I think banks will play a bigger role in terms of credit intermediation. Remember, in the 1990s, banks represented a much, much higher proportion of intermediated credit than they did in 2007. I think you will see the trend where banks play a broader and bigger role in terms of credit intermediation.
Q What do you make of the risks that governments will turn inward and stop collaborating once the recession subsides?
A I want to quote Madeleine Albright -- I am very optimistic but I worry a lot. Notwithstanding the fact that there always is this tendency toward protectionism when things are difficult I think lessons learned from the past in terms of importance of globalization and global trade will override that. There will be specific issues -- and of course Buy American is the big one for Canada. But I think these will be challenging irritants as opposed to massive changes in government policy around protectionism. I don't see that happening; there would be much lost.
The chief executive of Royal Bank of Canada, Gordon Nixon, said the chartered banks are ready to step in where the shadow banking system has withdrawn and make credit available-- at the right price. Mr. Nixon was at the International Economic Forum of the Americas in Montreal, where the future shape of the financial services sector has drawn much attention. Jeffrey Immelt, the CEO of General Electric Co., told delegates on Tuesday that the financial services sector has forever changed and that players will have to deal with more oversight and regulation. Mr. Nixon said that may be the case in the United States, but no drastic changes are likely in store for Canada. He agreed to speak with Financial Post reporter Paul Vieira, who is covering the Forum of the Americas.
Q There is a consensus that the worst is over, but are we not headed for a weak period of economic growth.
A I don't know if I am worried about it, but I do think it will be a muted recovery. The most important thing is for the economy to find bottom. And I do think we are starting to see signs of that occurring. But next year and beyond, anyone who is expecting a dramatic bounce back, in my judgment, will be disappointed. This will be a long and slow recovery.
Q Are you worried about governments trying to overreach with regulation to ensure a crisis such as this one never occurs again?
A It is a much less concern for the Canadian banks than it should be for other institutions in other countries. To some degree, I think our regulatory model is being looked at and being viewed as a good one.
Generally within Canada, the regulatory changes will be more at the margin than they will be in terms of significant restructuring.
When you look at other markets, like the U. S. and Europe, the restructuring will have a more dramatic impact. And there will be significant deleveraging that will occur because the [debt] in their systems is much greater than in Canada.
Q But there's been talk, at this conference, about how governments have to ensure from now on that the financial services sector is regulated in a way to ensure less financial innovation and more credit creation?
A There is no question that credit is extremely important to the functioning of the economy. But that's not just about banks. Credit comes from the bond, equity markets, and the shadow banking system. Many of those areas have collapsed alongside some of the banking systems.
We want to extend credit, we want to grow our balance sheet and loan books, as long as we are doing it on a basis in which we are taking on reasonable risk and getting paid to take bad risk.
The need for banks in the system is probably going to increase going forward.
Q Is there a recovery for the shadow banking system?
A I think it will recover and I think banks will play a bigger role in terms of credit intermediation. Remember, in the 1990s, banks represented a much, much higher proportion of intermediated credit than they did in 2007. I think you will see the trend where banks play a broader and bigger role in terms of credit intermediation.
Q What do you make of the risks that governments will turn inward and stop collaborating once the recession subsides?
A I want to quote Madeleine Albright -- I am very optimistic but I worry a lot. Notwithstanding the fact that there always is this tendency toward protectionism when things are difficult I think lessons learned from the past in terms of importance of globalization and global trade will override that. There will be specific issues -- and of course Buy American is the big one for Canada. But I think these will be challenging irritants as opposed to massive changes in government policy around protectionism. I don't see that happening; there would be much lost.
Housing starts beat projection
CMHC May data; 'Expected to improve throughout 2009'
Financial Post Published: Tuesday, June 09, 2009
Housing starts rose more than expected in May, with increased construction seen in both single and multiple dwelling sectors, according to Canada Mortgage and Housing Corporation.
The seasonally adjusted annual rate of starts increased to 128,400 units during the month from 117,600 in April, CMHC said yesterday.
"Housing starts are expected to improve throughout 2009 and over the next several years to gradually become more closely aligned to demographic demand, which is currently estimated at about 175,000 units per year," the Crown corporation said.
Economists expected housing starts to total 126,000 units in May.
The seasonally adjusted annual rate of urban starts was up 11.1% to 107,800 units in May, CMHC said. Multiple-unit urban starts rose to 60,900 units and single-unit starts increased to 46,900 units -- with both categories rising by a similar 11.1% from the previous month.
"The increase in May is broadly based, encompassing both the singles and multiples segments," said Bob Dugan, CMHC's chief economist.
Overall, urban starts were up 22% in Ontario, 16.8% in the Prairies, 7.3% in Atlantic Canada and 3.3% in Quebec. Urban starts fell 5% in B. C.
Rural starts were little changed at 20,600 units in May.
Toronto's new-housing market looked like it was starting to rebound. Condo and apartment starts were up 44.4% in May over the previous month, while detached housing starts were up 16.4%.
"It's a safe bet to say that the worst is over," said Ted Tsiakopoulos of the CMHC. "We have seen credit conditions improve, which would suggest that the we should see new-home construction move back to trend level," he added.
CMHC is confident that construction levels will return to normal and mirror the level of demographic demand by 2011.
"We saw a lot of the weakness in the first quarter [of 2009], and I think a lot of that is behind us now," Mr. Tsiakopoulos said.
Financial Post Published: Tuesday, June 09, 2009
Housing starts rose more than expected in May, with increased construction seen in both single and multiple dwelling sectors, according to Canada Mortgage and Housing Corporation.
The seasonally adjusted annual rate of starts increased to 128,400 units during the month from 117,600 in April, CMHC said yesterday.
"Housing starts are expected to improve throughout 2009 and over the next several years to gradually become more closely aligned to demographic demand, which is currently estimated at about 175,000 units per year," the Crown corporation said.
Economists expected housing starts to total 126,000 units in May.
The seasonally adjusted annual rate of urban starts was up 11.1% to 107,800 units in May, CMHC said. Multiple-unit urban starts rose to 60,900 units and single-unit starts increased to 46,900 units -- with both categories rising by a similar 11.1% from the previous month.
"The increase in May is broadly based, encompassing both the singles and multiples segments," said Bob Dugan, CMHC's chief economist.
Overall, urban starts were up 22% in Ontario, 16.8% in the Prairies, 7.3% in Atlantic Canada and 3.3% in Quebec. Urban starts fell 5% in B. C.
Rural starts were little changed at 20,600 units in May.
Toronto's new-housing market looked like it was starting to rebound. Condo and apartment starts were up 44.4% in May over the previous month, while detached housing starts were up 16.4%.
"It's a safe bet to say that the worst is over," said Ted Tsiakopoulos of the CMHC. "We have seen credit conditions improve, which would suggest that the we should see new-home construction move back to trend level," he added.
CMHC is confident that construction levels will return to normal and mirror the level of demographic demand by 2011.
"We saw a lot of the weakness in the first quarter [of 2009], and I think a lot of that is behind us now," Mr. Tsiakopoulos said.
Housing rebounds
Sales up again
Garry Marr, Financial Post Published: Tuesday, June 16, 2009
The housing market continued to rebound in May with a fourth consecutive increase in monthly sales, according to the Canadian Real Estate Association.
The Ottawa-based group, which represents about 100 boards across the country, said the average sale price of a home sold through the Multiple Listing Service reached a record $319,757.
Despite the new threshhold, the May average sale price was only 0.4% ahead of last year. Nationally, prices are up 16.4% from the January low.
"Sales activity is now closer to the pre-recession peak than it is to the recent low point reached last January," said Dale Ripplinger, the Reginabased president of the association. "Strengthening consumer confidence, low interest rates and improved affordability are drawing buyers to the housing market across Canada."
CREA said transaction activity in the country's most expensive markets is leading to an overall rebound, which is helping to skew the average price upward. In the past, the reverse has happened.
There were 49,521 units sold last month, a 0.8% decline from May, 2008. CREA said monthly sales have been increasing, on a seasonally adjusted basis, since January. The association noted sales were up 43% last month from the January bottom, on a seasonally adjusted basis.
Actual sales in May were up in 14 of the 25 major markets CREA surveys. Greater Vancouver sales jumped 16.4% in May from a year earlier. Toronto sales were up 1.9%, Montreal's 8.2%, Calgary's 11.3% and Edmonton's 18.7% from a year earlier.
A Re/Max Ontario-Atlantic Canada survey released last week showed the high-end of the market is starting to improve, too. The real estate company said Toronto set a monthly record for home sales of more than $1-million in May.
The jump in sales activity comes as supply is declining. The pace of new home construction is down close to 50% from last year while new listings in the existing homes market are also sharply declining.
CREA said new listings are at their lowest level since December, 2005. There were 49,438 new listings in the country's top markets, a 22.7% decline from a year earlier. Greater Vancouver saw new listings decline by 35% from a year ago while Toronto new listings were off 26.9%
gmarr@nationalpost.com
Garry Marr, Financial Post Published: Tuesday, June 16, 2009
The housing market continued to rebound in May with a fourth consecutive increase in monthly sales, according to the Canadian Real Estate Association.
The Ottawa-based group, which represents about 100 boards across the country, said the average sale price of a home sold through the Multiple Listing Service reached a record $319,757.
Despite the new threshhold, the May average sale price was only 0.4% ahead of last year. Nationally, prices are up 16.4% from the January low.
"Sales activity is now closer to the pre-recession peak than it is to the recent low point reached last January," said Dale Ripplinger, the Reginabased president of the association. "Strengthening consumer confidence, low interest rates and improved affordability are drawing buyers to the housing market across Canada."
CREA said transaction activity in the country's most expensive markets is leading to an overall rebound, which is helping to skew the average price upward. In the past, the reverse has happened.
There were 49,521 units sold last month, a 0.8% decline from May, 2008. CREA said monthly sales have been increasing, on a seasonally adjusted basis, since January. The association noted sales were up 43% last month from the January bottom, on a seasonally adjusted basis.
Actual sales in May were up in 14 of the 25 major markets CREA surveys. Greater Vancouver sales jumped 16.4% in May from a year earlier. Toronto sales were up 1.9%, Montreal's 8.2%, Calgary's 11.3% and Edmonton's 18.7% from a year earlier.
A Re/Max Ontario-Atlantic Canada survey released last week showed the high-end of the market is starting to improve, too. The real estate company said Toronto set a monthly record for home sales of more than $1-million in May.
The jump in sales activity comes as supply is declining. The pace of new home construction is down close to 50% from last year while new listings in the existing homes market are also sharply declining.
CREA said new listings are at their lowest level since December, 2005. There were 49,438 new listings in the country's top markets, a 22.7% decline from a year earlier. Greater Vancouver saw new listings decline by 35% from a year ago while Toronto new listings were off 26.9%
gmarr@nationalpost.com
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