Daniel DiManno sold his Toronto house for less than he had hoped and wanted to see if prices would cool before he bought a new one.
But Canadian mortgage rates are rising again and that is spurring DiManno and others to return to the market, cutting short an already brief housing market downturn.
"I saw that they are going to increase rates, so I called my bank and locked in 2.5 per cent for 120 days," said the 31-year-old accountant, starting the clock on a four-month search for a new home before borrowing gets more expensive.
After nearly a year of cooling sales and plenty of concern that Canada could be headed for a US-style housing crash, demand has roared back in key markets. What is still unclear is whether the recent surge is a reinflation of a real estate bubble, a final rush of buyers before rising rates choke off demand, or just a sign of market resilience.
The rise in mortgage rates comes after North American bond yields jumped on fears that an improving US economy will cause the Federal Reserve to wind down its monetary stimulus programme, known as quantitative easing, more quickly than expected.
After a long cold spring that dampened house hunting, May sales of existing homes rose 3.6 per cent, the biggest monthly gain in almost 2-1/2 years, returning the market almost to where it was before Canada's Conservative government tightened lending rules in mid-2012 to stave off a housing bubble.
Housing starts also jumped much more than expected in the month, adding to evidence that late-spring buyers have breathed life back into a market that some had forecast was heading over a cliff.
Toronto real estate agent Steven Fudge said he was starting to believe the market was back in balance after a cool-down. But the spectre of higher rates has brought buyers back, marking either a new phase of a bubble or the last kick of a dying mule, he does not know which.
One of his clients lost a 17-player bidding war last week for a downtown Toronto house. The home, listed at C$499,000 (HK$3.68 million), sold for more than 25 per cent over asking.
"I've been counselling buyers to be cautious," he said. "It really feels like almost anything can happen."
The question of whether the late-spring surge marks a reinflation of a real estate bubble is hanging over the industry.
The federal housing agency, the Canada Mortgage and Housing Corp, has revised up its outlook for sales, construction, and price increases this year and next, effectively declaring the downturn over.
"The market was moderating in the second half of 2012. Then we've had an inflection point, and went into a moderate positive trend since the beginning of 2013," said Mathieu Laberge, corporation deputy chief economist. "We should see this type of trend for housing starts going forward."
The agency, which insures the majority of mortgages Canadian banks issue, expects average national prices to rise 1.6 per cent this year and 2.1 per cent in 2014, which would be the "soft-landing" policymakers want and a long way from dire predictions of a 10 per cent to 25 per cent crash.
"I'd say we feel good. I mean, we're not out of the woods yet, but we feel good," said Brian Hurley, chief executive of Genworth Canada, the largest private residential mortgage insurer in the country.
Hurley acknowledges he was feeling afraid last year when sales dropped and analysts worried that tighter mortgage rules had squeezed too many buyers out of the market.
Prices fell in Vancouver, which had been Canada's hottest market, but national gains never slowed below 2 per cent.
"A lot of forecasters like myself are expecting a relatively flat market, but there's a significant upside risk that if rates remain at current levels indefinitely, you're going to start to heat the housing market back up," said Craig Alexander, chief economist at Toronto-Dominion Bank, Canada's second-largest lender.