House hunters still waiting for prices to drop further before buying may have sat on the sidelines too long, according to a new report.
A Re/Max study released Thursday shows home values in some major markets across Canada have recovered to levels where they were before the recent market drop.
Economists agree and say the power has shifted to a seller’s market in recent months, after the buyer’s were in control for more than a year.
“(The) bounce back that began in early spring has made this recession one of the shortest on record for real estate,” said the Re/Max “Bricks and Mortar Report.”
The survey says values are ahead of record highs set in 2008 in seven of the 11 markets surveyed for the brokerage network.
The national average price was $312,585, up 0.5 per cent from a year ago.
Re/Max said low interest rates, pent-up demand, and improved affordability as a result of record low interest rates are behind the recovery.
“Purchasers are clearly taking advantage of affordable prices and rock bottom interest rates,” said Re/Max executive vice-president Michael Polzler.
“Those who missed the boat in years past have found that sitting on the sidelines can be a costly move.”
Polzler said home prices are rising and inventories are tight.
“There is no question that the housing recession was fast and furious, but so too has been the recovery,” BMO Capital Markets economist Douglas Porter said.
Porter said existing home sales had plunged by about 40 per cent year-over-year last November through January, and prices fell by about 10 per cent on average across the country.
Since then, thanks in part to government incentive programs, particularly for new home buyers, the market has bounced back.
Earlier this year, Ottawa increased the amount first-time home buyers can withdraw from their RRSPs from $20,000 to $25,000, and implemented a tax credit for first-timers of up to $750 to help cover closing costs. It also introduced new tax credits of up to $1,350 for home buyers who do renovations.
To encourage the banks to lend money for home buyers when credit markets were tight, Ottawa also started an emergency mortgage purchase program where it swapped billions in mortgages for cash. Reports say that program will be extended.
Despite rising unemployment in Canada, now at 8.7 per cent as of August, Porter said home buyers are taking advantage of all the incentives and looking “beyond the valley of the recession” when making the purchase.
Toronto real-estate agent Darren Josephs said the market has “gone crazy” in recent months.
“It’s the most frenzy I’ve seen in my 12 years in this business,” Josephs said.
Most noteworthy for Josephs is the increase in demand for condominiums recently, many of which are attracting multiple offers.
Low interest rates are also enticing consumers to buy homes, Josephs said, despite the nation’s rising unemployment rate.
He said today’s market has done a complete turnaround compared to earlier this year, when sales had slumped following a global financial crisis that originated in the U.S. housing and mortgage industries.
“It’s pent up demand. A lot of people were waiting to get off the fence, but were too afraid, until now,” Josephs said.
Vancouver real estate agent Paul Eviston said prices in some of the areas where he works are exceeding the highs of 18 months ago.
Eviston said it’s also because of lack of supply. He said sellers aren’t putting their homes on the market because they are anticipating prices to rise further. That leaves less inventory for buyers, and drives up demand, and in turn price.
“Would you sell a stock if you thought it was going up?” Eviston said. “It’s the same thing in the real estate market.”