Last year ended stronger than expected for Canadian real estate and shed some hope for the industry and the Canadian economy as a whole. Many in the real estate industry predicted that 2009 would continue to post a decline in both units sold and average prices. MLS sales for 2009, however, were reported at approximately 465,000 which represents a 7% increase over 2008 and the average housing price was listed at $315,000 representing a 4% increase. This may seem small, but it is not insignificant. Coming out of this global economic downturn, Canada has posted the highest average housing price of any country in the developed world!
This drastic turnaround can be attributed to buyers regaining confidence in the market, low lending rates, the anticipation that those rates may soon start to rise, as well as the number of government incentives that have been offered to buyers to bring them back to the marketplace. Now with the HST set for a July launch, many buyers also are hoping to get in early to avoid that extra expense. This strong demand for housing with relatively small supply has kept an upward pressure on prices resulting in the strongest seller’s market since 2002.
If you wonder when the supply/demand will begin to shift again, look no further than the interest rates. With prices remaining high and interest rates on the rise, we will inevitably begin to see a reduced affordability in housing and an eventual cooling of this seller’s market.