Stephen Winters - ABR

With the worst of the recession over, residential real estate markets in major Canadian centres are poised for growth in the final quarter of 2009, according to a report released today by RE/MAX.

The RE/MAX Bricks and Mortar Report found the bounce back that began in early Spring has made this recession one of the shortest on record for real estate. Low interest rates, pent-up demand, and improved affordability levels have all played a role in the recovery now well underway. Percentage increases in sales from January to August 2009 were led by Vancouver, (up a substantial 14 per cent to 23,158), Victoria (up 7.4 per cent to 5,266), Edmonton (up 6.2 per cent to 13,691), Regina (up five per cent to 2,597), Ottawa (up 2.4 per cent to 10,830) and Toronto (up 1.8 per cent to 58,421).

Housing values are already ahead of record-breaking 2008 levels in seven of the 11 markets surveyed, including Newfoundland Real Estate Market (18.1 per cent year to $203,584), Regina (6.4 per cent to $244,088), Halifax-Dartmouth (3.5 per cent to $239,633), Winnipeg (3.5 per cent to $207,006), Ottawa (3.3 per cent to $301,684), and Toronto (up 0.3 per cent to $385,978). Nationally, average price hovers at $312,585, up 0.5 per cent over one year ago.

“Markets are heating up across the country,” says Michael Polzler, Executive Vice President, RE/MAX Ontario-Atlantic Canada. “Purchasers are clearly taking advantage of affordable prices and rock bottom interest rates. Those who missed the boat in years past have found that sitting on the sidelines can be a costly move. Prices are on the upswing and inventory levels are tightening, so the push toward home ownership is expected to continue throughout the Fall and possibly into early 2010.”

The recovery of Canada’s resale housing markets speaks to the tremendous value Canadians place on the importance of owning a home. The number of Canadians overall who own a home has increased since 1981 from 62.1 per cent to 68.4 per cent, with some markets posting even higher homeownership rates -- Calgary (74.1), St. John’s (71.5), Regina (70.1), and Edmonton (69.2). Significant gains have also been made over the same period in markets such as Ottawa -- where homeownership levels rose from 51.4 per cent to 66.7 per cent -- and Toronto, where levels rose fro m 57.3 to 67.6 per cent.

Fraser & Stephen Winters
St. John's Real Estate
709-682-9245 or 709-682-9045
info@fatherandsonteam.ca

The seller's market has certainly ended. Inventory has increased approximately 30 per cent and listings are taking longer to sell or expire (never sell during their contract period).

The St. John's real estate market boomed during 2008, driven mostly by optimism created by the Newfoundland Government budget surplus, the Hebron oilfield announcement, and the Vale Inco Hydromet in Long Harbour. In light of this, speculating buyers purchased homes from all price ranges in fear of property values zooming sky high. The market cooled after the third quarter peak in 2008 and remained cool during the first quarter of 2009 causing the seller’s market to weakened into balanced market by the end of 2008.

Prices, however, remain quite stable even during our current cooling market conditions. According to Stats Canada, new housing prices in the capital city area increased by 0.4 per cent in March compared to February.

CMHC held a seminar this week discussing the outlook for Newfoundland for 2009 with regards to economy and real estate market and prices. As in most recent reports and news releases the message was the same: Newfoundland is expected to remain strong in 2009.

While most of Canada and the world are in doom and gloom, somehow Newfoundland is expected to escape the mayhem. I know we are somewhat protected being on an island, but I can't see St. John's getting away virtually unscathed. Then again it's better to hear positive news then to hear the sky is falling on a daily basis.

In a quote from The Telegram's article entitled "Local housing market, economy remain strong" Chris Janes was reported to say

"It's still on the up and up locally in terms of our labour markets, economy, economic health overall, government's fiscal situation, migration factors ... and it's just a lot of positive activity that's hard not to be focused on," Janes said following his address to a packed housing seminar in St. John's Wednesday. "We still have very strong consumer spending, and that's key to any province's economic health and, right now in terms of all provinces in Canada, we have the strongest consumer spending of all."

Where does this leave the St. John's housing market......back to normal levels in my opinion. Resale markets are not as "hyper" as they were last year and new homes will start to taper off to the point where we'll see more and more "spec houses". If you remove last years 25% housing price increase, this year will be comparable to previous year before it...modest gains, balanced market, with the occasional multiple offer just to spice things up a little and keep it interesting.

We are into the third week of January and the most common real estate question I am being asked is "where will the housing prices be in 2009?" As in most years, it’s difficult to predict. Last year CHMC predicted 6% and RE/MAX stated at least 12%. I remember saying after the first quarter we’ll see much higher then 12%. The final tally for 2008 is not yet in but should be close to 23% in my opinion. Now….where do I see the St. John’s real estate market for 2009. Currently my mind is set at a 5% increase from 2008. How can I say this with the US housing market expecting to drop even more, Canadian markets are predicted to lower in some areas, and the UK, no real direct relation, but the world housing market seems to be taking a hit right now. It all boils down to consumer confidence, the provincial economy and a balanced market. All three we are seeing in Newfoundland currently. There are still a lot of "sale pending" left over from 2008 that will help keep the numbers up for unit sales in 2009, but there is clear evidence that it’s no longer a seller’s market. With mortgage rates still at VERY low levels, as well as increased inventory in new construction and pre-existing homes, this will leave more choices for buyers. Personally I do not see the market going into the negative numbers, but I do see houses sitting longer on the market and “price reduced” signs being more familiar then “sold signs”.