It's no secret that, when it comes to predicting the real estate market, economists and pundits often get it wrong. Perhaps that's why CAAMP chose to ask the people driving the market - homebuyers - about their attitudes regarding the uncertain state of the Canadian real estate market.
In Housing and Mortgage Market Trends in Canada - a report written in May by Will Dunning, the association's chief economist - CAAMP surveyed 2,058 Canadians, both homeowners and renters, to hear their opinions on the US credit crunch and the current state of the Canadian real estate market.
Canadians were split as to whether now is a good time to purchase a home in their community - although they were generally more positive than they have been in the past. Based on a scale of one to 10, where one is a very bad time to buy a home and 10 is a very good time, Canadians averaged a score of 5.52 - higher than the association's prior three surveys, and slightly lower than the highest score of 5.62 that was recorded in the Fall 2007 survey.
Ratings were much more positive in the east than in the west, as average ratings in Atlantic Canada, Ontario and Quebec were substantially higher than in Saskatchewan, Alberta, British Columbia and Manitoba.
Increased consumer confidence is a good sign for the Canadian real estate market - especially considering the reported job losses and stock market hits to which many Canadians are being subjected. It's especially promising in light of the escalating situation in the United States.
The survey reported that more Canadians are aware of the situation in the United States compared to last fall, and their level of concern, in general, is mid-range - although it has increased compared to a year ago (5.71 out of 10, compared to 5.41 in 2007). Individuals who were more aware of the situation in the US were more likely to feel positive about buying a home in their community. Conversely, those who were less aware of the details of the US sub-prime crisis were more concerned that now is not a good time to buy.
While consumer confidence is an important component of a healthy real estate market, employment is probably more so. Dunning said it takes time for people to make housing decisions, get ready to act on them and then to act - so the employment rate this year is not as important a statistic as the number of jobs that have been created over the past three or four years and the percentage of adults who are currently employed.
In these two categories, Canadians are also healthy. Job creation has exceeded the rate of population growth in all but two years over the past 11 years, and the employment rate in Canada is at the highest level ever in the 32-year history of the data. In the second quarter of 2008, the employment rate was a record 63.9% - well above the long-term average of 59.9%.
While the Canadian Bankers Association (CBA) notes that arrears at the chartered banks have increased slightly as of February 2008 (0.27% compared to an average of 0.25% during 2005 to 2007) - and the arrears rate for all mortgages in Canada may be higher, although no data is available - the report said that the resale housing market is still strong.
It forecasts that housing resales will be close to 498,000 in 2008 and 504,000 in 2009. As long as sales reports remain above annual rates of 475,000, the market will be considered very strong'.