Home sales surge 72 per cent

Rapid rise fuels talk of market bubble

Toronto Home Sales

The average price of a resale home in Canada rose to $337,410 in December, according to the Canadian Real Estate Association.

Sales and prices of existing homes in Canada soared in December, capping a whirlwind 2009 that began weakly and then went on to set record highs for prices, and further stirring debate of a housing bubble.

The Canadian Real Estate Association said Friday that a total of 27,722 homes changed hands in December, up 72 per cent from the same month in 2008, when activity ground almost to a halt in the wake of the global financial crisis.

“Sales activity in 2009 came in like a lamb and went out like a lion,” said association president Dale Ripplinger.

The real estate association said the national average price in December rose to $337,410, up 19 per cent year over year. For the year as a whole, the national average price climbed five per cent from 2008 to a record $320,333. The association reiterated that the national average price was skewed due to activity in Canada’s priciest markets.

Average prices set annual records in a majority of local markets in 2009, and in every province except Alberta, the association said.

Year-to-date activity was still trailing 2008 levels at the end of September 2009, but a 59 per cent year-over-year gain in the fourth quarter, the best ever, pushed 2009 sales activity above annual levels for 2008, it said.

The robust figures continue to show the housing sector is leading the overall domestic economy out from a long downturn. But the housing market’s strength has also been at the centre of a debate over whether a bubble in sector is forming.

“The raft of data will do nothing to quell talk of a bubble, talk that the Bank of Canada and the Canadian Real Estate Association have studiously downplayed,” said Doug Porter, deputy chief economist at BMO Capital Markets.

“And, before we officially jump on the bubble bandwagon, we would again point out that the reported price change is skewed by the surge in Vancouver and Toronto sales.”

Record low interest rates have helped fuel the housing boom, while low supply and pent-up demand have also driven up prices.

But Scotia Capital economists Derek Holt and Karen Cordes said “dismissing housing risks is being a tad Pollyannaish.”

They said in a report that it was likely that housing will “experience a more sudden decline in activity in the back half of the year and into 2011.”

The real estate association said December sales records were reported in Ontario, Quebec, Saskatchewan, New Brunswick, and Newfoundland and Labrador.

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Source:  By Ka Yan Ng, Reuters | January 16, 2010
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About Tariq Sultan
Dear Readers, I am a dedicated Toronto, Ontario based real estate professional who has been successfully meeting and exceeding the needs of his clients for past several years. I am actively involved in the insurance, financing, and mortgage industry. Real estate is not only my career – it is my passion. I strive to continuously provide my clients with exceptional service to ensure they are fully satisfied when it comes to their real estate needs. For any real estate related inquires contact me today, I will be happy to assist you. Best wishes, Tariq Sultan

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