Canada posts record July for real estate sales, B.C. tips into balanced market

Record July sales in Metro Vancouver and Victoria helped lift British Columbia's real estate market into balanced conditions between buyers and sellers across the province, the B.C. Real Estate Association reported Friday, compared with last summer's slide into buyer's territory.

Across the country, meanwhile, markets experienced record sales in July posting their biggest year-over-year increase in two years.

With lower prices and near record low mortgage rates, buyers across the province rushed to buy up 10,051 homes through the Multiple Listing Service in July, the association said, lifting the month's results 53 per cent over the same month a year ago.

"The difference in the resale housing market now, compared to the beginning of the year, is night and day. "Homebuyers recognize that interest rates and prices have bottomed out, and are taking advantage of excellent affordability before prices and interest rates move higher."

A five-year fixed-rate mortgage, the most popular product among consumers, is still available for under four per cent at some financial institutions. Variable rate mortgages, tied to prime, remain in the three per cent range and are not expected to rise until June. The Bank of Canada has pledged not to change its lending rate until then - but it is not an ironclad guarantee.

The low rates seem to have worked and have the housing market even hotter than it was in 2007, a record year. July sales in 2009 were 3.9 per cent above the previous July high set in 2007.

It has been a stunning reversal for a real estate market that had almost ground to a halt over the winter. MLS sales on a seasonally adjusted basis have risen for six straight months and are up 61.2 per cent off the decade-low set in January. Sales are only off 1.4 per cent from the May, 2007 peak.

Part of the pressure on prices is coming from a dearth of supply. New listings in July were down 13 per cent from a year ago to 73,444. It marked the seventh monthly year-over-year decline in new listings.

The overall supply of homes for sale on the MLS was down to 219,982 at the end of July, a 12.5 per cent decrease from 2008. Based on present activity, there is only 4.4 months of housing inventory in the mark. That's a sharp contrast to the 12.8 months of inventory available in January.

"Home sales through the MLS systems in July provide clear evidence that sentiment about making major purchases continues to improve," said Gregory Klump, chief economist with CREA. "Activity may level out over the rest of the year as home prices and mortgage lending interest rates creep higher. The number of new listings coming onto the market is down from last year and the rebound in sales activity is paring inventories, so the number months of inventory is on the wane. These trends are supporting average prices."

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