Canada's resale housing market recovered lost ground in the second quarter and is poised to stabilize for the remainder of 2009, after a very slow start to the year, according to the Royal LePage Market Survey Forecast and House Price Survey released. As the economy begins to stabilize and consumer confidence improves, house prices are expected to appreciate slightly in much of eastern and central Canada. Greater than national average price declines are predicted for the western cities that saw the greatest price inflation earlier in the decade, including Edmonton, Calgary and Vancouver.
"Given the grim shape that Canada's real estate market was in this past winter, the turnaround we have witnessed in the second quarter is really quite remarkable. We believe this improvement represents a sustainable change across the country. While seasonally weaker conditions are to be expected in the fall, the plucky Canadian real estate market is stabilizing and a healthy level of activity is forecast for the second half of 2009," said Phil Soper, president and chief executive officer, Royal LePage Real Estate Services.
During the second quarter, average house prices across most Canadian markets began to appreciate, recovering from the lows experienced during the winter months. Average national prices remain slightly behind those posted during the same period in 2008. Of the housing types surveyed, the price of detached bungalows declined to $327,964 (-3.5 per cent), two storey property prices decreased to $392,378 (-3.7 per cent), and standard condominiums price points fell slightly to $236,612 (-4.0 per cent), year-over-year.
Soper observed, "With our industry's busiest quarter behind us, we feel comfortable revising our 2009 forecast to the positive. When the anticipated market decline struck last winter, it was with greater speed and intensity than predicted, but the strength of the rebound was equally surprising. If general economic conditions continue to improve, as we expect they will, 2009 will be characterized as a period of moderate housing market correction after several years of above-average price growth."
The 2009 national average house price is forecast to decline marginally by 2.0 percent, to $297,500 by end of year and unit sales are projected to fall slightly by 1.0 percent to 430,000.
"Improved affordability, driven by flat or lower home prices and inexpensive mortgage financing, has been the principle catalyst in this recovery. Pent up demand is also a factor in the lift we see in the second quarter numbers. For six months straddling the year's beginning, buyers stayed away from the market in an understandable, emotional reaction to very unsettled global economic conditions. Canadians appear to be stepping beyond these fears and are once again moving onto and up the home ownership ladder," stated Soper.
In early 2009, the precipitous drop in unit sales remains the most, dramatic indicator of the recession's impact on Canada's real estate market. With spring, consumers appeared ready to believe the worst was behind them and returned to the market in force, driving increased activity across each housing type. Couple this with historically low interest rates and leveling unemployment, Canada's residential real estate market got back on track during the quarter.
Undergoing an inevitable cyclical correction, price adjustments can be seen with marked variances across Canada's provinces. As expected, British Columbia and Alberta posted the most significant price modifications, as home values in those markets retreated in the wake of several mid-decade years of unsustainable price inflation, and have now evolved to a more balanced state. Prices appear to have stabilized and it is expected that these regions will continue to see improvements into 2010. In particular, the impact of lower home prices has improved affordability to the point that people are buying homes again on the West Coast, where sales activity has increased substantially.
Alternatively in Atlantic Canada, homes continue to appreciate due to strong local economies, which have helped to shelter the region somewhat from the turbulence witnessed in other provinces. As well, the region's generally moderate home prices have helped keep demand strong. Newfoundland, in particular, stands out as a region that continues to see significant home price appreciation, as supply cannot keep up with the demand driven by vibrant and growing industries such as those in the province's oil and gas sector.
Meanwhile, home prices in Toronto declined slightly in the second quarter, reflecting the national average trend. In the early spring, it was first-time buyers who triggered the increased activity levels, now those looking to move up are also active in the market. Similar to the situation in other large cities in central Canada, the most desirable neighbourhoods experienced supply shortages, which put upward pressure on prices.
"Looking ahead to the second half of 2009, year-over-year price comparisons will likely appear increasingly more favourable. It is important to remember that the baseline for the latter half of 2008 was unusually low, particularly in the fourth quarter when the full impact of the global financial crisis was felt. Our expectation is that most Canadian regions will experience stable housing prices through into the spring of 2010," concluded Soper.
REGIONAL MARKET SUMMARIES
Halifax
In Halifax, a stable economy has contributed to a healthy real estate market where average house prices increased modestly despite a slight dip in sales activity. The market is beginning to pick up following a slow first quarter. Pent up demand will see a return to a more active market in the last half of the 2009 with the anticipation of a slight boost in sales activity and average house prices growing at a leisurely pace.
Montreal
The housing market in Montreal experienced a solid second quarter, with average house prices for most property types expected to increase for the remainder of 2009. Higher inventory levels resulted in balanced market conditions seeing the number of new listings equal to the number of sales. Low interest and unemployment rates will help maintain the strength of the real estate market through to the end of the year.
Ottawa
Ottawa continues to remain a steady market for residential real estate, with sales activity in the second quarter coming out strong from a slow first quarter. Ranked number two among Canada's large cities for affordable real estate and coupled with low interest rates, all types of buyers were drawn to the market. House prices are expected to remain stable throughout the remainder of year with numbers slightly higher than anticipated.
Toronto
In Toronto, the real estate market witnessed significant second quarter gains. The return of consumer confidence and an upswing in spring market activity brought house prices and unit sales down as buyers emerged to take advantage of affordable properties and low lending rates.
As the market begins its transition from a buyer's market to a balanced market, with indications of a seller's market arising, it's anticipated that the market will stabilize by the end of year.
Winnipeg
Winnipeg's real estate market has remained relatively resilient in the second quarter with average house prices in key housing segments increasing from the first quarter of 2009. Real estate in Winnipeg is modestly priced when compared to other cities in Canada, creating ideal conditions for buyers in the province. Looking ahead, average house prices are anticipated to stabilize for the remainder of the year.
Regina
Regina's real estate market started on the road to recovery in the second quarter of 2009 and is expected to further improve through the remainder of the year. An increase in unit sales helped diminish the city's high inventory levels as buyers are beginning to initiate deals. Recovering manufacturing and resource sectors, new construction activity in Regina, and low interest rates have also helped to improve buyer confidence.
Calgary
With the economic downturn and the oil and gas industry struggling, the housing market in Calgary has been on the decline since 2008, after many years of price inflation at the beginning of the decade. Quarter one of 2009 revealed some signs of price increases and stabilization in certain areas in Calgary, but the second quarter reveals fluctuations in the market. These price fluctuations are occurring across Calgary in all housing types with the market forecast predicting price reductions for the remainder of 2009.
Edmonton
Housing market conditions in Edmonton were characterized by lower inventory levels and moderate house price increases. Buyer demand was strong during the second quarter as most buyers felt a sense of urgency to capitalize on the recent market conditions. This has led to a slight tightening in Edmonton's housing market with appreciation in average house prices expected for the last half of 2009.
Vancouver
Vancouver's real estate market stabilized in the second quarter of 2009 following a price correction that started last fall moving towards a balance between supply and demand. Properties priced at, or below, market value are generating multiple offers from buyers. Average house prices throughout the last half of the year are expected to inch upwards, but increases will likely be in the low single digits.
Royal LePage's quarterly House Price Survey shows the following annual change of prices for key housing segments in select national markets:
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Detached Bungalows
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Q2 2009 Last Quarter Q2 2008 Bungalow %
Market Average Average Average Change
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Halifax 235,333 215,667 233,000 1.0%
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Charlottetown 160,000 157,000 156,000 2.6%
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Moncton 158,000 156,000 164,000 -3.7%
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Fredericton 172,000 167,000 162,000 6.2%
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Saint John 187,681 201,476 202,364 -7.3%
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St. John's 200,000 193,000 181,000 10.5%
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Atlantic 198,368 190,748 192,636 3.0%
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Montreal 236,148 232,375 234,352 0.8%
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Ottawa 325,417 317,500 316,167 2.9%
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Toronto 416,179 405,286 434,282 -4.2%
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Winnipeg 237,750 231,663 233,800 1.7%
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Regina 272,900 266,625 278,850 -2.1%
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Saskatoon 312,250 312,500 340,375 -8.3%
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Calgary 401,600 391,833 438,122 -8.3%
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Edmonton 302,143 297,857 320,000 -5.6%
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Vancouver 760,000 743,750 839,500 -9.5%
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Victoria 466,000 453,000 450,000 3.6%
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National 327,964 319,865 339,879 -3.5%
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Standard Two Storey
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Q2 2009 Last Quarter Q2 2008 2 Storey %
Market Average Average Average Change
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Halifax 277,333 262,333 275,000 0.8%
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Charlottetown 190,000 188,000 185,000 2.7%
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Moncton 134,200 134,500 132,000 1.7%
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Fredericton 210,000 210,000 197,000 6.6%
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Saint John 240,889 268,000 285,179 -15.5%
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St. John's 276,000 267,000 249,333 10.7%
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Atlantic 198,368 190,748 192,636 3.0%
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Montreal 337,872 330,056 336,443 0.4%
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Ottawa 325,417 318,500 315,750 3.1%
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Toronto 544,785 516,052 562,478 -3.1%
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Winnipeg 262,914 251,721 257,800 2.0%
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Regina 245,000 245,000 254,000 -3.5%
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Saskatoon 337,250 348,500 388,000 -13.1%
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Calgary 400,167 390,689 437,744 -8.6%
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Edmonton 328,571 322,979 348,571 -5.7%
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Vancouver 846,000 828,750 943,000 -10.3%
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Victoria 446,000 435,000 470,000 -5.1%
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National 392,378 379,708 407,374 -3.7%
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Standard Condominium
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Q2 2009 Last Quarter Q2 2008 Condo %
Market Average Average Average Change
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Halifax 164,000 162,000 154,500 6.1%
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Charlottetown 120,000 120,000 120,000 0.0%
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Moncton n/a n/a n/a n/a
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Fredericton 140,000 137,000 126,000 11.1%
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Saint John 126,000 181,387 119,191 5.7%
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St. John's 215,333 205,667 193,333 11.4%
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Atlantic 174,623 172,423 156,774 11.4%
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Montreal 209,311 206,528 204,942 2.1%
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Ottawa 212,750 207,833 203,667 4.5%
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Toronto 296,039 289,397 311,026 -4.8%
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Winnipeg 143,700 145,943 144,614 -0.6%
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Regina 180,375 168,806 190,000 -5.1%
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Saskatoon 202,500 187,000 236,000 -14.2%
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Calgary 252,344 245,756 285,033 -11.5%
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Edmonton 203,833 199,167 226,000 -9.8%
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Vancouver 424,000 406,500 450,750 -5.9%
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Victoria 275,000 260,000 295,000 -6.8%
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National 236,612 231,526 246,490&nb