Canadian Housing Market Shows Signs Of Revival

le the U.S. housing market continues to experience severe problems, Canada's housing market is showing signs of emerging from its winter hibernation,[/b] according to the latest Real Estate Trends report released today by Scotia Economics, Toronto. The report found that Canadian home sales strengthened in both February and March, and preliminary reports suggest this firming trend continued in April. The report also noted that 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 sales-weighted basis. ‘These 'green shoots' are encouraging,’ says Adrienne Warren, senior economist and real estate market specialist at Scotia Economics. ‘On an annualized basis, average home prices in early 2009 are running about six percent below last year's levels, while sales volumes are down 16 percent. This is tracking a slightly better performance than our forecast for a 10 percent decline in average prices this year, and at the low end of our forecast for a 15 percent to 20 percent drop in sales." Yet Warren cautions against popping open the champagne bottle. ‘Nonetheless, we still feel there is more downside than upside risk to home sales and prices,’ she says. ‘The significant deterioration in domestic labour markets in recent months suggests little prospect for a major resurgence in near-term demand. Meanwhile, a still high level of active listings relative to underlying demand will continue to pressure prices.’ SOURCE: Scotia Econ


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