According to the Royal LePage House Price Survey, Canada’s housing market is on the road to recovery but is experiencing a pronounced undersupply of homes for sale in southern Ontario and other regions of the country. With the recession retreating, the report found that home prices are stabilizing and unit sales are increasingly driven by improved affordability.
The market’s strong showing in the third quarter has led some commentators to refer to the current conditions as the beginning of a real estate boom. Royal LePage cautions that the increase in sales activity and firming of house prices are the product of a normal market correction and not the beginning of another aggressive expansionary cycle. "Once housing supply returns to normal levels, we believe the economy will support modest pricing growth into 2010”, said Phil Soper, president and chief executive, Royal LePage Real Estate Services.
Ontario saw home prices stabilize or gain slightly year-over-year with much of the recovery occurring throughout the strong third quarter. A shortage in housing supply is leading to bidding wars in several cities. In Toronto and the Greater Toronto Area, the real estate market saw a distinct pause earlier this year. House prices, however, did not fall dramatically due to a reduction in the number of listings on the market.
It is a modest recovery but a recovery nonetheless and that change is reflected in the housing market,” said Soper. Although key economic indicators are showing signs of improvement, fears over job security and economic instability will keep many Canadians in their current homes. “Until they are convinced things are back to normal, some people will not put their homes up for sale and we’ll continue to have constrained supply.”
This trend of constrained supply can only mean less competition and sustained values for those who will sell within the coming months. So while those concerned about job security and financial stability will wait to make major decisions, those who will be selling a home in the weeks and months to come will no doubt benefit.
Source: Excerpts taken from the Royal LePage House Price Survey (Q3)