The average national price of a big city home in Canada surpassed $300,000 for the first time ever in May with sales numbers hitting record levels.
Trisha Root thought she had finally found a house in Edmonton she could afford, until other potential buyers pushed her out of a deal.
"We put in an offer two days ago on a house, and by the next day there were seven other offers and ours wasn't good enough," she told CTV News.
The average price for a residential home in a major market climbed to $303,836 in May, up 12.9 per cent from last year.
"We're really seeing sellers' market conditions prevailing." Chief Economist Bob Dugan from the Canadian Mortgage and Housing Corporation told Canada AM Thursday.
The latest information on sales recorded through the MLS (Multiple Listing Service) by the Canadian Real Estate Association shows that the real estate market continues to heat up, despite forecasts of a cooldown amid rising interest rates and home prices.
The high demand and limited supply of homes, which is driving the price increases, is a phenomenon occurring across the country.
"Even in the eastern provinces and central provinces where the economies aren't as strong as out west, we still see very strong demand relative to the supply of homes that are available for sale," Dugan said.
New listings in May hit the highest level on record, but failed to match sales, leaving the market tighter.
May is the fourth consecutive month in where the average residential price broke all previous records.
As well, the average house price broke all previous monthly records in a number of major markets including Vancouver, Calgary, Edmonton, Regina, Saskatoon, London, Hamilton, Montreal, and Saint John.
While all Canadian housing markets have experienced price growth, western homebuyers are dealing with the greatest increases.
"The strongest price growth has been out west...we see double digit price increases in places like Vancouver, Victoria, Calgary, Edmonton," Dugan said.
The Greater Vancouver area has the highest average price for homes in Canada at $518,176. That's bad news for potential buyer Phil Willet. Every day he searches a list of properties on his computer in disbelief.
"Eight-hundred and fifteen thousand dollars for 1,100 square feet," he said, shaking his head.
Toronto has the second highest average price at $365, 537, and Calgary is close behind at $358,214.
Dugan pegs Calgary as the next hot market, predicting it will catch up and even surpass Toronto's average price in either June or July this summer.
"They have one of the strongest growing economies in Canada, a lot of job growth, and as a result you see a lot of people moving from other parts of the country to Alberta," he said.
However, other major cities still have an average price below $300,000:
- Montreal: $219,433
- Halifax: $210,255
- Winnipeg: $159,801
For those homebuyers hoping the trend is a real estate bubble just ready to burst, analysts have some bad news.
"It is very solid demand fundamentals that are driving that price. As long as those economies are performing well and attracting workers from the rest of Canada, I think you're going to continue to see price pressures," Dugan said.
CREA Chief Economist Gregory Klump said Wednesday that full-time job growth, rising incomes and resilient consumer confidence are contributing to keep the housing demand strong.
"Recent price increases are resulting in a growing shortage of lower priced resale home listings in a number of markets," which are pushing up the average price, he said.
"With prices on the way up and a shortage of listings in lower price ranges, some buyers may feel that if they don't buy now, they may not be able to afford to later," Klump added.
The real estate organization reported that 37,460 houses were sold in major cities last month, up 4.4 per cent from a year earlier.
Sales for the year as a whole were five per cent higher than the same five-month period in 2005.
The CREA represents more than 85,000 realtors working through 99 real estate boards, 10 provincial associations and one territorial association.
With a report by CTV's Todd Battis
