Existing home sales activity reached the highest level ever for the month of December, according to statistics released by the Canadian Real Estate Association. Strong demand in the second half of 2009, especially in the fourth quarter, pushed annual sales above 2008 levels.
“Sales activity in 2009 came in like a lamb and went out like a lion,” said CREA president Dale Ripplinger. “The continuation of unusually low interest rates may keep national sales activity near current levels over the coming months, as will a blip in housing demand in Ontario and British Columbia from home buyers motivated to beat the introduction of the HST.”
MLS® residential sales activity totaled 27,744 units in December, which was 72 per cent above the activity for the same month in 2008, which dropped to the lowest level in a decade.
National sales activity began 2009 on a weak footing. Despite year-over-year increases in the second and third quarters of the year, year-to-date activity was still trailing 2008 levels at the end of September 2009. A 59 per cent year-over-year gain in the fourth quarter of 2009 pushed sales activity above annual levels for 2008.
“Our MLS® market resiliency shone through in 2009,” said outgoing WinnipegREALTORS® president Deborah Goodfellow. “Quite remarkably, we finished off in impressive fashion with a best December ever and a new annual dollar volume record.”
December MLS® sales for the first time in Winnipeg topped the 600 unit level, which was 23 per cent higher than the same month in 2008. Also, an MLS® dollar volume record for the year was established at $2.47 billion.
Nationally, annual activity in 2009 was down 10.7 per cent from the peak reached in 2007. A total of 465,251 homes traded hands in 2009, which was up 7.7 per cent from 2008 levels, and represents the fourth highest level on record for annual activity.
On an annual basis, the national residential average price climbed five per cent to a record $320,333. Average prices set new annual records in a majority of local markets in 2009, and in every province except Alberta. In Winnipeg, the average price rose five per cent to $217,370.
“CREA’s latest statistics will no doubt spark further bubble talk amongst the usual suspects,” said CREA chief economist Gregory Klump. “Cooler heads recognize that many of the recent gains reflect temporary factors that could fade by summer.”
In its recent report on the market, the Bank of Canada said the likelihood of a housing bubble is very remote.
In Winnipeg, Goodfellow said the housing market is not subject to the booms and busts of other major markets, so a bubble is even more remote.
The large year-over-year increase in the national average price in December reflects the high degree to which it was skewed downward in late 2008 by unusually low activity in Canada’s priciest markets. The national average price has recently returned to more typical levels.
“The extraordinary decline in activity one year ago and subsequent rebound, particularly for higher-priced real estate, is stretching current year-over-year comparisons,”said Klump. “By the second half of 2010, price gains are likely to shrink significantly, since a year will have elapsed since the decline and rebound.
Nationally, there were 4.1 months of inventory in December 2009 on a seasonally-adjusted basis, which was the lowest level in more than two years.
“Further expected increases in supply will also take some steam out of the market,” said Klump. “A more balanced market will result in smaller price increases in the second half of the year, but a massive decline in demand similar to what we saw in late 2008 and early 2009 seems as unlikely as a massive spike in supply.”