Housing Sales Continue To Grow
The CREA report for June, 2009 had some very encouraging numbers:
Sales in June were up 8.7% from May, 2009.
June sales were 17.9% higher than those in June of the previous year.
Increased sales and fewer new listings have caused inventories to drop to their lowest levels since August, 2007. Low inventories are important to ensure that price increases become more widespread.
Average home prices increased by 1.7% over June, 2008.
Increases were recorded across the country, but were especially strong in the west. B.C. led the way with nearly 40% more homes being sold year over year. Double-digit gains were made elsewhere too: Saskatchewan was up 25.2%, Alberta 22.2%, and Ontario 15.7%.
CREA also predicts that activity in the second half of the year will match or exceed the results in the first half.
There are many reasons for the robust performance of Canada’s housing market. It seems Canadians learned a lot from the real estate bust of the early 1990s. Because of that experience, the Canadian government introduced tighter rules for borrowing money, which helped Canada avoid the type of subprime lending that caused so much damage to the U.S. housing market.
Another key difference between this recession and the previous housing bust is interest rates. In the early 1990s, borrowing costs were rising, but this time around, interest rates have been very low. As reported in the Calgary Herald, Millan Mulraine of TD Securities noted that Canada’s relatively stable housing market and healthy banking sector allowed homebuyers to take full advantage of lower interest rates and lower prices.
Housing Starts Are Also Up
Another positive sign emerged in the market for new homes. Housing starts were up 8% in June over May of 2009. Again, the results were strongest in western Canada, where urban housing starts in the Prairie provinces increased by 60% and those in B.C. jumped by 25%. In Ontario and Québec – hard hit by manufacturing job losses – the numbers were not as strong. Ontario had an increase of only 3% in urban housing starts, while Québec experienced a decline of 6%. Atlantic Canada also experienced a drop of 4%.
Overall, the numbers for housing starts were much higher than analysts had expected.
All told, the figures for June housing sales and starts seem to indicate that the Canadian housing market is gaining strength. And with mortgage rates still affordable, this may be an ideal time to shop for a new home.