Garry Marr, Financial Post Published: Thursday, September 10, 2009
Even the real estate industry in Canada is having a hard time swallowing the complete turnaround in the housing market.
A new survey from Royal LePage Real Estate Services Ltd. found more than a quarter of its agents do not believe the housing market's current strength is sustainable.
When 1,153 agents and brokers were surveyed across the country about whether they thought the housing market's recent performance was sustainable, only 707, or 61% said yes. Another 28% said no and 11% didn't know.
Canadian housing sales climbed 18.2% in July from a year ago and are now on pace to beat 2007 sales, a record year. The stunning turnaround comes after sales were almost frozen over the winter, with January activity at a decade low.
But declining housing prices and low interest rates, including a commitment by the Bank of Canada to keep them low, have been credited with turning the market around.
Among the real estate agents who don't believe the market is sustainable, 36% said the recovery will end when interest rates climb which they say is inevitable. Another 20% of those who don't believe in the housing recovery said there has not been enough job growth to sustain the real estate sector.
Overall, 66% of those surveyed said low interest rates were the number one reason behind the recent strength of the housing market. No other category even got a double digit response.
Phil Soper, chief executive of LePage, said the government's commitment to not moving rates until June, 2010 has been a key factor in the rising market.
"This principled stance has been received very positively by prospective homeowners," said Mr. Soper. "Together with numerous positive economic indicators seen over the course of the summer, we believe that the current health of real estate market is sustainable."