House Sales strong across Canada

When you see an ordinary house in west end Toronto sell for a hundred thousand more than the homeowner paid five years ago, you have to ask—what’s up in the real estate market?

The answer, according to Rob LePage, a broker with Royal LePage—”It’s a seller’s market, big time. Most listings are all going very quickly, usually with multiple bids”

And the action is not confined to Toronto, according to national housing surveys from Canada Mortgage and Housing and Century 21. Both the federal agency and the national real estate company say a strong economy and consumer confidence will sustain rising numbers of house sales. Nor do they see slightly higher mortgage rates stalling the action. The trend actually began in 1999, a record year for house sales in the decade, up 7 per cent, according to CMHC.

Based on a national house price survey, Century 21 predicts increases not only in sales but also in prices this year. Predictions are for an increase of five to six per cent in Calgary, Edmonton, London, Ottawa and Toronto. In Atlantic Canada, Quebec and the prairies, prices are predicted to rise two to three per cent. In British Columbia, the housing marketas been stagnant. Realtors are pinning their hopes on the recovery in Asia for boosting the provincial economy and in turn, house sales.

It’s clear the real estate market is tied to the economy, like the hipbone’s connected to the leg bone. And this spring, the economy is blooming—good growth in jobs, federal cuts to personal tax rates, and a strong stock market.

Roger Lewis is a senior economist with CMHC who studies the housing outlook and forecasts housing demand.

“There are a lot more people with jobs and money in their pockets—those are helpful factors. And softer measures—like consumer confidence, are good. The Conference Board of Canada surveys consumer attitudes. They found the consumer confidence index crashed when the Asian crisis hit and the stock market and dollar went down. But it’s fully recovered.”

The tie-in between good Asian markets and the housing market on the West Coast is demonstrated by recent sales of expensive homes. In January, a hundred and 25 homes, each worth more than half a million dollars, sold in Vancouver, according to the Real Estate Board of Greater Vancouver. That’s compared to 84 a year earlier, when Asian markets were still down.

More jobs in the economy also boost house sales. Len Visser is with a Century 21 franchise in Abbottsford, British Columbia. He says with 800 new jobs coming into the community, he anticipates a strong housing market this spring.

In fact, the national housing survey by Century 21 and CMHC both talk about a shortage of homes for re-sale. When that happens, the real estate industry calls it a seller’s market. And fewer listings of homes, especially in the popular mid-price range, definitely contribute to higher prices.

That can lead to other developments. One is that more homeowners decide to sell and take advantage of the market. Rob LePage says traditionally, more houses come on the market “when the leaves come out in the spring” and that “usually cools things off a bit” in the price bidding. But this year, he says the demand is such that “if a house is priced well, it’ll be gone.”

The other response to buyer demand is more construction of new homes. CMHC tracks housing starts across Canada. Roger Lewis says house construction was up last year by nine per cent, the highest in a decade. This year, he’s predicting an increase of four per cent.