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The residential real-estate market has gone through three phases over the past five years:

(1) June, 2007 – MLS sales began to slip. The number of MLS listings started to increase in December, 2007, six months after the demand fell off. The average price of housing continued to rise to February, 2008, and then started to dip.

(2) November, 2008 – MLS sales bottomed out. The number of MLS listings peaked in the same month. Demand rebounded sharply throughout 2009 and supply tightened up. A shift in the average sales price trailed by five months, continuing to drop until March, 2009, and then started to climb in subsequent months.

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(3) December, 2010 – MLS listings (supply) dropped every month for seven months until the end of 2010 and then again began to increase. MLS sales and the average price continued to rise for the next two months and then started to drop again.

Cameron Muir, chief economist for the British Columbia Real Estate Association, said in an interview the recession of 2008 led to a lot of fear and an expectation of a deflationary spiral that would bring prices down. But by 2009, consumers realized that things were not so bad. Low interest rates made housing more affordable. By the end of 2009, sales were at record levels.

Housing prices appeared to be unrelated to supply or demand in early 2010. The average price was impervious to drops in demand and increases in supply. Prices were "tremendously sticky," Mr. Muir said. "People do not like their homes to be less than what they paid for them," he said.

The average price does not give a clear picture of what is happening in the market, Mr. Muir added. A higher average price may reflect the sale of a disproportionate number of multimillion-dollar homes, which lifts the average.

Mr. Muir said the market conditions are now "balanced," not tilting in favour of buyers or sellers. He anticipates sales will continue to increase but at a gradual pace. "Home prices will remain quite flat," he said.

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