Housing prices are recovering, with the average resale price in May - skewed by an increase in sales activity in the country's most expensive markets - reaching the highest level on record, the Canadian Real Estate Association said Monday.
"National resale housing market activity returned to pre-recession levels in May, 2009. The rebound in activity is being led by an increase in transactions in some of the most expensive markets in the country, which is skewing the national average price upward," CREA said
"The biggest contributors in monthly activity in May compared to April were Toronto, Calgary, Edmonton, Montreal and Vancouver and those are among some of the more expensive [markets]in Canada," CREA's chief economist Gregory Klump said in an interview.
The national average resale price of $319,757 "was up four-tenths of a percentage point from the previous record set in May, 2008," CREA said.
Federal public servant Elliot Loh recently paid $484,000 for a home in Ottawa's Manor Park area, nailing the deal for $1,000 under the asking price after some back and forth negotiations.
"We took it immediately, as every other decent house in the community either sold or had offers put on it …Now there is nothing left," Mr. Loh said in an e-mail.
His family wanted a "kid-friendly" home in a central location.
"We were thinking that the way gas prices are going, long commutes are going to become very expensive over the next few years. I would rather put the money in a mortgage," Mr. Loh said.
In the community of Weston, northwest of downtown Toronto, Jacqueline Storino emerged the victor in a bidding war for a four-bedroom detached home with her offer of $350,200 on May 26.
"Our deal was accepted $11,200 over asking with no conditions," said Ms. Storino, who moved quickly when she saw the home she wanted.
"I saw it [the listing]on Tuesday morning. We went to see it at lunch time, and we bought it that evening," said Ms. Storino, who works as a sales and marketing manager in the new homes sector of the real estate market.
Because of her experience in the industry, Ms. Storino said she knows "a good product when I see it, and it was a fantastic product" in an up-and-coming neighbourhood.
However, she added, "I was not expecting a bidding war because we thought those had gone out with the market slowdown."
Ms. Storino and her husband were competing with three other prospective bidders. "We were lined up on the street… I heard we won it by $300."
Ms. Storino said it is a good time to buy, because prices are starting to move up again.
CREA reported that, over the past four months, "the national …residential average price has recovered 16.4 per cent from the low in January."
On a seasonally adjusted basis, CREA reported that 37,649 homes changed hands in May - the fourth consecutive monthly increase. This was down 2.2 per cent from May, 2008, as the year-over-year rate of decline moderated.
Mr. Klump characterized the pickup in real estate market activity as more than the typical spring bounce.
There has been a "much-stronger-than-normal seasonal increase in activity, and that's driving up seasonally-adjusted activity for sure," Mr. Klump said.
The number of new listings is down 19 per cent on a seasonally adjusted basis from a year earlier, restoring some balance to the market, CREA added.
"Strengthening consumer confidence, low interest rates and improved affordability are drawing buyers into the housing market across Canada," CREA president Dale Ripplinger, a Regina real estate broker, said in a statement.
Mr. Klump said inventory levels are still high in many markets, "but fewer new listings and rising sales activity suggests that the selection of homes available for sale may shrink as the year progresses.
"The supply of homes up for sale needs to be drawn down further before average price increases become more widespread among local markets," Mr. Klump said.
"The more expensive markets in Canada that dove at the end of last year and skewed the average price lower… are recovering and, because those are higher-priced markets, that's skewing the average back up," Mr. Klump said.
Toronto-Dominion Bank economist Millan Mulraine said that, over all, the report on May resale activity "was a very favourable report on the state of the Canadian housing market, as it suggests that the buoyancy in home sales since the turn of the year has been sustained…
"This could be an early indication that the correction in the Canadian housing market may be nearing an end," Mr. Mulraine said in a research note.
Bank of Montreal economist Douglas Porter said the housing market, while healthier than it had been, is not in full recovery mode yet.
"Low borrowing costs, more affordable prices in many markets and some pent-up demand after the fall/winter sales freeze have provided some heavy duty support for housing," Mr. Porter said in a research note.
"However, even with these positives, further gains will be much tougher to come by, especially with employment continuing to sag," he said.
"The housing market is not about to go off to the races, even if it has been pulled back from the brink."
Note : Did you buy or sell a home in May? Did you run into a bidding war? Please share your experience with us. Contact Globe and Mail reporter Virginia Galt at email@example.com.