But wait .. next year may be too late. The new 13% harmonized sales tax comes into effect in Ontario on July 1, 2010, and it will likely hit the whole housing market hard. If you haven't sold by July 1, you may well be out of luck. And if you haven't bought by then, well, maybe you'll want to change your mind. And the funny thing is, hardly anyone seems to realize it.

"There are going to be a lot of very surprised people on July 1," says Jim Flood, director of government relations for the Ontario Real Estate Association. "It's a massive tax increase."

So here's the bad news: Although resale houses will not be taxed, everything to do with the sale will be -- the house inspection, the agent's commission, the moving costs and legal fees.

There will even be tax on the home energy audit all sellers are now compelled to carry out thanks to the Green Energy Act the McGuinty government passed in May. And speaking of the home energy audit, why isn't anyone concerned about that?

Altogether, that means the extra tax on a resale house priced at $369,000 will come in at roughly $2,000 (largely the tax on the agent's commission) and double that and more on many ordinary houses in Toronto, before you even remember you have to pay Toronto's onerous land-transfer tax, too.

It's enough to make you wonder exactly why you're thinking of moving. Or to get you packing your bags and calling the mover today.

But it's worse news for new home buyers, although not as bad as it was originally expected to be. Under pressure from groups like the Ontario Home Builders Association, the province has decided not to levy the tax on the first $400,000 of any new home purchase. (GST has been payable for a number of years but builders tend to hide it in the house price.)

So on a $500,000 house, the extra HST hit will be $6,000 instead of $30,000 (builders get a 2% tax credit that lowers the overall tax hit from 8% to 6%). Without that change, the loss of a potential 21,200 jobs in the GTA alone looked probable. That's enough to scare off first-time home buyers and potentially many other people struggling to make ends meet.

Easy, according to the OREA's Flood: "There's a lot of ignorance. I don't think the average consumer is even aware of the tax." The HST will impact many things you haven't even thought of yet -- but the housing-related taxes are killers. How new tax adds to cost of a sale:

Realtor Commission $1,100- $1,700
Mortgage insurance $470
Legal costs $80 *
Home Inspection $32
Title Insurance $15
Total $1,747 -$2,297
(Estimates based on house less than $400,000, from Ontario Real Estate Association)

Lag in seasonal sales cycle brought on by the recession, coupled with undersupply, creates illusion that market is booming.

Canada’s housing market is on the road to recovery but is experiencing a pronounced undersupply of homes for sale in southern Ontario and other regions of the country, according to the Royal LePage House Price Survey. With the recession retreating, the report found that home prices are stabilizing and unit sales are increasingly driven by improved affordability.

The market’s strong showing in the third quarter has led some commentators to refer to the current conditions as the beginning of a real estate boom. Royal LePage cautions that the increase in sales activity and firming of house prices are the product of a normal market correction and not the beginning of another aggressive expansionary cycle.

“The 2009 real estate market has seen sales activity lagging approximately one month behind the typical seasonal patterns,” said Phil Soper, president and chief executive, Royal LePage Real Estate Services. “The economic recession halted the flow of the real estate cycle from the fourth quarter of 2008 through the first quarter of 2009, but it is essentially now back on track albeit delayed. Once housing supply returns to normal levels, we believe the economy will support modest pricing growth into 2010.”

While the Atlantic provinces saw a strong recovery in home prices with double-digit percentage increases year-over-year in some markets in the third quarter of 2009, western provinces have been slower to recover from the significant price corrections that occurred in 2008, particularly in British Columbia and Alberta. Meanwhile, Ontario and Quebec saw home prices stabilize or gain slightly year-over-year with much of the recovery occurring throughout the strong third quarter.

Royal LePage’s third quarter report shows that the average price of a two storey home in Canada was comparable to a year ago (up 0.1 per cent) at $409,335. Average bungalow values increased 0.06 per cent year-over-year to $341,146, while the price of an average condominium increased 0.09 per cent to $243,748.
In Toronto and the Greater Toronto Area, the real estate market saw a distinct pause earlier this year. House prices, however, did not fall dramatically due to a reduction in the number of listings on the market. Currently, single family and semi-detached home prices are outperforming other categories. Detached bungalows are up 0.8 per cent and standard two storey homes are up 1 per cent year-over-year, while standard condominium prices fell 3 per cent over the same period. All three categories have shown price increases compared to second quarter numbers.

After the economic crisis created a drought of home sales and declining prices from the fourth quarter of 2008 through the first quarter of 2009, the market began to recover in the spring due to pent up demand and improved affordability. “It appears the market recovered unevenly,” Soper commented. “In the first quarter of 2009 we saw the return of first time buyers, then cautious move-up buyers. In the third quarter, the sales activity of the higher priced regions of the country and higher priced property types picked up momentum and caught up to the lower priced segments.”

A shortage in housing supply is leading to bidding wars in several cities, including Toronto, Richmond Hill, Markham, Montreal, St. John’s (NF), St. John (NB), Moncton, Edmonton, Calgary, North and West Vancouver, and Victoria. Improved affordability is the biggest driver of current real estate activity levels, Soper added. “With the widespread availability of affordable mortgage financing, and only modest increases in home prices, affordability is better now than it has been in a number of years. We expect house prices and interest rates to remain relatively stable into next spring which would keep affordability levels intact.”