Canada Emerges from “The Housing Market Correction No One Noticed”

According to the Royal LePage House Price Survey released in October, the average price of a home in Canada increased between 1.2 per cent and 4,1 per cent in the third quarter on 2013.

The survey showed a year-over-year average price increase of 3.7 per cent to $418,686 for standard two-storey homes, while detached bungalows rose 4,1 per cent to $381,811. During the same period, the average price for standard condominiums saw a more moderate increase, rising 1,2 per cent to $246,530. Sales volumes urged in a number of regions, as Canadians re-entered the housing market after sitting on the sidelines for more than a year- marking the end of the most significant housing market correction since the 2008-2009 global recession.

“Canada experienced a significant housing market correction over the last four quarters that most in the nation missed entirely,” said Phil Soper, president and chief executive of Royal LePage. “Many regions experienced dramatic slowdowns in the number of homes trading hands, but news of double-digit unit sales declines went largely unnoticed, over-shadowed by a macabre fascination with the prospect of a U.S.-style home price collapse, which of course never transpired. Our over-heated real estate market of 2011 and early 2012 drove some to the sidelines. Home price appreciation ground to a halt for a year- a necessary breather and predictable market response.

“Our housing market turned a corner in the third quarter. Buyers returned to the streets in droves, resulting in a sharp increase in home sales. In many cities, there simply weren’t enough properties on the market to satisfy demand, which put upward pressure on prices for the first time in 2013,” continued Soper. “We expect this positive momentum to continue through the all-important spring market of 2014, buoyed by a combination of pent-up demand, increasing consumer confidence and continued low interest rates.”

“Job growth begets consumer confidence. An emboldened citizen is more likely to enter into a major financial transaction. Following almost six years of turbulent times, economic fundamentals are pointing to an era of renewed prosperity. The American economy is on an upward trajectory and businesses in Canada and around the world are finally loosening purse strings and investing in people for growth. This is vitally important for an exporting nation like ours. And as goes the Canadian economy, so goes the residential real estate sector,” explained Soper.

Soper concluded, “while interest rates must of course rise from current historical lows, we anticipate the change to be modest in the medium term. As the country emerges from this extended correctional cycle, we believe the real estate market stimulus previously provided by low interest rates will be replaced by a strengthening labour market and true economic recovery.”

For more information, please see Royal LePage Survey of Canadian House Prices at www.royallepage.ca.

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