Report on Business
Globe and Mail Update, Tuesday, Jun. 16, 2009 02:57AM EDT
It was only a few weeks ago that Vancouver realtor Pamela Allen noticed a welcome shift in the market – she began to see bidding wars on resale homes.
“My last three buyers, all three lost their offer because they were in a bidding war,” the Re/Max agent said in an interview, adding she has been busier than she has been in months.
“Anything up to $600,000 is flying off the shelves,” she said.
Ms. Allen's experience is markedly different from as recently as January, when sales in Vancouver were down 59 per cent from a year earlier. Indeed, prices have dropped, and May sales in Vancouver were 17 per cent above May, 2008, for the first year-over-year gains in months.
Canada's real estate market is clearly on the path to recovery, economists say, citing recent data as evidence that the worst of the slump may be over.
“You're seeing people beginning to kick those tires again in the housing market,” said BMO Nesbitt Burns senior economist Michael Gregory.
Many local real estate boards are, for the fourth month in a row, reporting strong sales in May, compared with the previous month.
Observers are watching for a national report on May sales expected today from the Canadian Real Estate Association.
National sales have been rising month over month since February, and in April, for example, sales on a monthly basis jumped 11.2 per cent, seasonally adjusted.
The national market has yet to eke out a year-over-year gain. But economists expect that to change within the next couple of months.
“If you don't get it into positive territory in May, it probably will in June,” said Bank of Nova Scotia senior economist Adrienne Warren.
When it does happen, it will mark a sharp rebound from January, when sales were at their lowest point in 10 years.
“The worst of Canada's recession occurred through December and January of this year,” Mr. Gregory said. “Things were looking really bleak. It caused people to be cautious.”
Now, thanks to low mortgage interest rates and a slide in prices, buyers are more confident, he added.
Most activity is among first-time buyers at the more affordable end of the market, Ms. Warren said. In Calgary, for example, 70 per cent of resales in May were on homes priced under $400,000.
“First-time buyers are coming in to take advantage of the ultra-low interest rates we're seeing right now,” Ms. Warren said.
The recent growth is due partly to pent-up demand from the end of last year, and observers said this could level off over the summer once that delayed activity has been satisfied, and as rising unemployment continues to temper consumer activity.
“The worst is over,” Mr. Gregory said. “But will the recovery be strong and robust? The jury's still out on that one.”