There's little mystery why Canada's housing market has seen a rebound in sales this spring.
"Record-low mortgage rates have unleashed pent-up demand that accumulated last year when previously soaring prices closed the door on first-time buyers," said Sal Guatieri, senior economist with BMO Capital Markets, in a research report released Friday.
"After a harsh winter, spring has come surprisingly early to Canada's housing market. Sales have rebounded from a lengthy slumber and prices have firmed," he said.
"While it's doubtful that the housing train has left the station without a recovery on board, the data support our long-held view that the Canadian market is merely correcting, not busting."
In Calgary last month, historic low mortgage rates combined with less expensive homes compared with a year ago sparked activity in the local real estate market. May witnessed the first year-over-year gain in single-family MLS sales since September and since April 2007 for condos.
"We need to be cautious about declaring a firm bottom is at hand, but the improvement in recent months is an encouraging shift," said Bonnie Wegerich, president of the Calgary Real Estate Board, when the May numbers were released. "All signs indicate we are moving to a balanced and stable market. Consumer confidence is improving, prices are holding steady and inventory is trending downward.
"I think some buyers are trying to predict the bottom of the market. The reality is if you spend too much time trying to anticipate the bottom, you miss out on choice and selection."
There were 1,584 single-family home sales last month, up 15.8 per cent from May 2008, while the condo market saw 653 sales, representing a 13.2 per cent hike from a year ago.
The average sale price for a singlefamily home in May was $436,427, while for a condo it was $275,212, compared with $426,311 for a singlefamily home and$277,491 for a condo in April.
The prices are off from year-ago levels when the average was$479,564 for single-family homes and $311,816 for condos. Single-family prices are off by nine per cent, while condo prices are down by nearly 12 per cent from last year.
At the national level, Guatieri said despite massive job losses, demand has firmed for housing, even in Ontario and British Columbia and, to a lesser extent, in "boom-bust" Alberta.
"The surprising upturn in sales, coupled with fewer listings, has tilted the market back towards balance from the buyers' haven of last year," he said.
By Mario Toneguzzi, Calgary HeraldJune 13, 2009
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