Buyers drawn into real estate market in February

Resale housing activity in Canada in February 2009 was up from seasonally adjusted levels the previous month, according to statistics released by The Canadian Real Estate Association (CREA).

A total of 28,669 homes traded hands via the Multiple Listing Service® (MLS®) nationally in February 2009 on a seasonally adjusted basis. This is 8.6 per cent above seasonally adjusted levels in January 2009, and the first monthly increase in activity since September 2008. Seasonally adjusted activity in February also surpassed levels reported in November and December of 2008.

Monthly seasonal increases in activity were largest in British Columbia (14.4 per cent), Nova Scotia (12.7 per cent), and Alberta (11.9 per cent). In Ontario and Quebec, the monthly rise was on par with the national increase.

"Typically the Spring market we're moving into generates more activity, and this year there are the benefits from historically low mortgage rates and improved affordability in most markets," says the President of The Canadian Real Estate Association, Calvin Lindberg. "REALTORS® are reporting increased interest especially from first time homebuyers."

Actual (not seasonally adjusted) transactions numbered 25,373 units in February 2009. This was 31 per cent below MLS® residential sales levels a year earlier, but it is the smallest year-over-year decline since October 2008.

The supply of homes for sale remains high, but has been trending lower. National MLS® residential new listings numbered 65,060 units in February 2009, down 10.9 per cent from the same month one year ago. On a seasonally adjusted basis, MLS® residential new listings are down 11.4 per cent from their peak reached in May 2008.

"The housing supply is expected to continue easing, but it will take time before it realigns with lower demand," said CREA Chief Economist Gregory Klump. "Economic uncertainty is keeping home buyers in a cautious mood, so homes are taking longer to sell than in recent years. Lower sales activity at the higher end of the price spectrum will keep the national MLS® residential average price under downward pressure."

The national average price for home sales via the MLS® was $281,972 in February 2009, 9.2 per cent below February 2008. This is smaller than year-over-year declines observed in the past four months. It is also the first time that the year-over-year decline in the national average price has decelerated since first turning negative in July 2008.

The national MLS® residential average price continues to be pushed downward by lower activity in some of Canada's more expensive housing markets and by fewer transactions in higher price ranges. The MLS® average home sale price remained up from year-ago levels in Saskatchewan, Manitoba, Quebec, New Brunswick, Prince Edward Island, and Newfoundland & Labrador in February 2009.

"Real estate is local, so it is important that buyers and sellers accurately determine pricing issues in their specific neighbourhood," adds CREA President Calvin Lindberg, a West Vancouver REALTOR® ."Despite the doom and gloom, there are multiple offers on properties in some markets. That happens when the house is priced comparably to others in the area. Buyers are looking, but they are confused by the barrage of information they're getting about the economy and the state of real estate. Consumer confidence remains a critical factor for the housing market."

The downward pressure on the national MLS® residential average price is being skewed lower in large part by fewer sales in British Columbia, Alberta and Ontario, where homes are more expensive and demand has softened most. MLS® home sales in these three provinces accounted for 66 per cent of national activity in February 2009, down from 69 per cent in 2008.

The price trend is similar but less dramatic for the weighted national MLS® average price, which compensates for changes in provincial sales activity by taking into account provincial proportions of privately owned housing stock. The weighted national MLS® average sale price was down 5.3 per cent year-over-year in February, compared to a 6.1 per cent decline in January.

Seasonally adjusted residential dollar volume for MLS® sales totaled $8 billion in February 2009, an increase of 7.2 per cent from the previous month.

"Consumer confidence will continue to be depressed by a barrage of negative economic news in the months ahead," said Klump. "Heightened job insecurity will keep many potential homebuyers on the sidelines. Those who are confident about their job situation will benefit from improving affordability in a number of housing markets." (CREA 16/03/09)

Kelly Lantz

Kelly Lantz

CENTURY 21 Colonial Realty Inc.
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