OTTAWA - August 26, 2009 - The worst is over for North America's beleaguered housing markets, with a steady stream of data out of Canada and the U.S. indicating the recovery is at hand, economists say.
"A similar pattern in both countries is unmistakenly suggesting we've not only bottomed in housing, but we're on the way back up," said TD Bank chief economist Don Drummond.
Canada's already brightening picture was helped along Wednesday by a report showing housing prices in major markets across the country jumped 1.5% in June, building on May's 2% advance.
The rebound in prices was evident even in most of Canada's hardest hit urban markets, like Toronto and Vancouver, the Teranet-National Bank report showed.
For National Bank senior economist Marc Pinsonneault, that means "the worst of home-price deflation in Canada is behind us," he said Wednesday.
"The improvement is consistent with the huge improvement in market conditions in most of the major cities in Canada," which show sales resales rising sharply - up 18% in July alone - and listings on the decline, Mr. Pinsonneault said.
"The housing market has clearly turned the corner," BMO Capital Markets economist Jennifer Lee said in an interview.
"The items supporting a housing recovery have been working in tandem over the past while, and they are still going strong, like the Energizer bunny."
Renewed strength in the Canadian market was evident in four of six major markets tracked by the Teranet-National Bank survey. Vancouver posted its first price gain after 11 months of declines, up 1.6%; Montreal posted its fourth straight monthly increase, up 1.2%; Ottawa gained 2.1%; and Toronto recorded its second straight month of gains, up 2.3%.
Current conditions in Canada have created a seller's market, said Pinsonneault, although he expects greater balance to return as higher prices draw more properties onto the market.
Mortgage rates, meanwhile, won't rise over the next 12 month by more than 50 to 75 basis points from today's 5.85% posted rate on fixed five-year mortgages, he said.
One uncertainty is whether the Bank of Canada can hold lending rates steady, as promised, until the middle of next year, economists say.