Canadian Housing Market Shows Some Spring In Its Step

Scotia Bank Real Estate Trends
Adrienne Warren (416) 866-4315
adrienne_warren@scotiacapital.com

May 5, 2009 - Canada's housing market is showing signs of emerging from its winter hibernation. The Canadian Real Estate Association reported a healthy pickup in home sales nationally in both February and March, beyond the typical seasonal bump, albeit off decade lows in January.

Preliminary reports suggest this firming trend continued in April. Buyers, especially first time, are being lured by historically low mortgage rates, greater affordability and increased supply. The rise in demand, combined with fewer new listings, has restored a better balance to the market.

The national new-listings-to-sales ratio averaged 2.2 in March, down from a cycle peak of 2.7 last November (about 2.0 is considered balanced). Average home prices steadied in February and March, though were still down almost 8% year-over-year (or 5% on a regional salesweighted basis).

These ‘green shoots' are encouraging. On an annualized basis, average home prices in early 2009 are running about 6% below last year's levels, while sales volumes are down 16%. This is tracking a slightly better performance than our forecast for a 10% decline in average prices this year, and at the low end of our forecast for a 15-20% drop in sales.

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