Real estate market in Canada becoming ‘normal’ as activity rises for third month in a row

Seasonally adjusted national home sales activity via the Multiple Listing Service® systems of Canadian real estate boards climbed 4.6% in October 2010. The monthly rise in activity builds on similar increases in August and September.
 
As a result, activity now stands 13.3% above July levels, the year’s low point. Three quarters of local markets posted monthly increases in seasonally adjusted activity in October, led by Toronto and Vancouver, CREA said.
 
As further evidence that the market is returning to normal, sales activity in October stood halfway between the recessionary low reached in December 2008, and the record level activity posted in December 2009.
 
Actual, not seasonally adjusted, national sales activity in October 2010 was 21.6% below levels for October 2009, when activity set a new record for the month.
 
The CREA report points out that national sales activity rebounded last year without a single monthly decline and hit record levels in the second half of 2009. As a result, large declines in activity compared to year ago levels are masking recent monthly gains in national sales activity.
 
It added that record level activity late last year is expected to continue stretching year ago comparisons over the rest of 2010.
 
The number of new residential listings edged up 1.3% on a seasonally adjusted basis in October. New listings remain 14% below the recent peak reached in April 2010. It means that national sales activity and new listings have swung widely but synchronously, which has kept the market in balanced territory since the spring.
 
Over half of all local markets in Canada are balanced, with an almost equal proportion of the remainder in buyers’ or sellers’ market territory, CREA said.
 
The national average price trend remains stable, in keeping with a balanced market. The national average price trend has remained fairly steady for more than a year, but only recently is this being reflected in year on year comparisons.
 
The national average price for homes sold in October 2010 was $343,747, up less than a percentage point compared to one year ago. October marks the fourth consecutive month in which the average home price has remained roughly even with year ago levels.
 
‘The continuation of low interest rates is supporting sales activity, which has been improving over the past few months in a number of major markets including Vancouver,’ said Georges Pahud, CREA’s president.
 
‘National sales activity is now running almost halfway between the highs and lows posted between late 2008 and late 2009,’ said Gregory Klump, CREA’s chief economist. ‘This suggests that the Canadian housing market may be starting to normalize. After the wild rollercoaster ride that many housing markets have been on, normal and stable market conditions are something that many buyers and sellers will likely welcome,’ he added.