The real estate markets are bouncing back.

Pent-up demand for residential housing has bolstered sales in Canada’s major markets – a clear signal that the housing sector has shifted into recovery mode, according to Re/Max.

More balanced market conditions have emerged, effectively ending the stronghold that buyers had on the market over the past six to eight months. Canada’s largest markets, Toronto and Vancouver, led the charge – with June sales among the highest in history for both local real estate boards.

Residential sales in Greater Vancouver increased 75.6 per cent over one year ago, to 4,259 units, just short of the record breaking 4,333 sales, which occurred in June 2005.

Overall, major markets began to recover in March, posting escalating sales in April, May and June.

Close to 11,000 properties changed hands in Toronto, up 27 per cent over one year ago, setting a new record for sales in the month of June. The figure was just slightly off the all-time peak of 11,146 units.

The impetus is expected to continue throughout the remainder of 2009, with most centres now forecasting year-end sales on par or ahead of 2008 levels.

“While sales are the leading indicator, there are other clear signals that recovery is indeed underway,” says Elton Ash, regional executive vice-president, Re/Max of Western Canada.

“Renewed consumer confidence, albeit cautious, has been key, supported by improved economic news. In addition, we’ve seen sale price-to-list price ratios climb across the country, rising as high as 105 per cent in some communities. Vendor incentives have also come off the table, both for resale and new housing stock.”

The recent surge in resale activity can be attributed to three key factors – pent-up demand, low interest rates, and greater affordability.

The combination – in conjunction with declining inventory levels – has created heated market conditions in hot pocket neighbourhoods, prompting a resurgence in multiple offers in June.

Average prices are holding steady or climbing, days on market are down, and inventory levels continue to tighten, especially at entry-level price points.

Although the current pace may be unsustainable, all markers point to greater stability in the market, leading to healthier activity in the long run, with inventory levels a key variable influencing pent-up demand.