Second quarter report shows strength of resale market

In Winnipeg, limited new and resale housing inventory continued to tighten the city’s real estate market, and will do so for the remainder of 2008, according to a new report from Royal LePage Real Estate Services.  

The limited supply of housing throughout Winnipeg had a dramatic impact on average house prices which, for all housing types surveyed during the second quarter, experienced double-digit year-over-year increases. 

The report indicated Canada’s real estate market is poised to maintain the momentum gained from a solid second quarter through to the end of 2008.  

While home prices are expected to appreciate in all but two major markets during the year, activity levels across the country are expected to decline from 2007’s record-setting pace, as pent-up demand is satisfied and some buyers retreat to the sidelines in the face of increasing economic uncertainty, according to the House Price Survey and Market Survey Forecast report.

When compared to the second quarter of 2007, the average cost of a Winnipeg bungalow by the end of the second quarter this year increased by 12.5 per cent to $233,800. The average price of a standard two-storey home rose by 13.7 per cent to $257,800 during the same period, while the average price for a standard condominium increased by 23.3 per cent to $144,614.

The report said inventory levels were tightened throughout Winnipeg due to an influx of provincial in-migration, during the second quarter, according to the report. 

“There is still considerable demand in the marketplace with two out of every three properties in June selling at or above list price,” said WinnipegREALTORS® Association president Darlene Clare.

During the second quarter, average house prices rose across most of the country with rates of appreciation easing from the dramatic spikes that were observed in 2006 and 2007. Continued robust demand led to strong double-digit gains in Saskatchewan, Winnipeg and St. John’s, while a surge in inventory caused Alberta’s white-hot market to record the country’s only major-market price decreases.

“Canada’s resale housing market proved resilient in the second quarter,”  said Phil Soper, president and chief executive officer, Royal LePage Real Estate Services. “In fact, we have been pleasantly surprised that strong fundamentals, such as enduringly positive employment numbers and reasonable mortgage rates, have countered increasingly pessimistic consumer sentiment, based primarily on the American housing recession.

“After several years characterized by a persistent shortage of listings, home buyers have felt the pressure of bidding wars and take-it-or-leave-it counter offers ease during 2008; home sellers have had to come to grips with the longer time it is taking to sell properties, but can take comfort in a market that continues to support reasonable price increases. 

“Our research indicates that all markets will continue to perform well, albeit at a tempered pace,” he added.

The national average house price is forecast to rise by 3.5 per cent, to $318,000 by the year’s end.  Home sale transactions are projected to decrease by 11.5 per cent to 461,000 unit sales by the end of 2008.

The highest average price appreciation occurred in detached bungalows, which rose by 5.6 per cent to $351,587, followed by standard two-storey properties, which rose to $418,943 (5.2 per cent), and standard condominiums, which increased to $248,408 (3.9 per cent), year-over-year.

An extreme inventory shortage has helped pressure prices upwards in the mid-west, while excess supply loosened markets in the previously frenzied Alberta market.

Saskatchewan’s cities recorded the country’s highest price gains, but Winnipeg followed closely behind.  

“The inevitable result of a booming economy was observed as the markets held strongly in the sellers’ favour as house prices skyrocketed in both Saskatchewan and Manitoba,” according to the report.

But Clare said the number of MLS® listings have noticeably increased, with new listings in June up 16 per cent over the same month in 2007, while active listings (current supply of available properties on MLS®) were up 28 per cent. It was the second month in a row  that new properties entered on MLS® exceeded 2,100 listings.

“There may be more choice on the market,” said Clare, but everyone’s situation is unique. Considerations depend on type, condition, price range, location, and differing supply and demand of properties within specific neighbourhoods.