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Garry Marr May 9, 2011 – 6:03 PM ET

Another day of data Monday brought further proof of the resiliency of the Canadian housing market and the current frailty of its U.S. counterpart.

The latest bad news for American housing was a report from real estate company Zillow showing the market might have a ways to go before it bottoms out.

Zillow said existing home prices in the United States fell 3% in the first quarter of 2011 — a pace not seen since 2008, which was the worst point of the housing recession. U.S. prices have dropped 29.5% from their peak in June 2006, the company said.

Negative equity is now a reality for 28.4% of American homeowners whose mortgages are under water. Foreclosures also began to rise again in the first quarter after falling in late 2010.

In Canada, things got a little better, according to the Canadian Real Estate Association, which was forced to adjust its forecast upward after the sale of some multi-million homes in the Vancouver area started pushing prices up.

“Multi-million property sales in Greater Vancouver have surged unexpectedly,” said the Ottawa-based group, which represents about 100 boards across the country.

The organization said the revelation forced it to improve its forecast for 2011, which now calls for home prices to rise 4% to $352,500. By 2012, the increase will slow to 0.9% or $355,800.

The activity also convinced CREA to update its previous forecast for sales. It now expects 441,100 sales in 2011, a 1.3% decline from a year earlier. It had been expecting a 1.6% decline in sales.

“The extent to which high-price sales activity in Vancouver will pitch up the average price locally, for British Columbia and nationally will likely diminish in the next couple of months,” said Gregory Klump, chief economist with CREA.

Still, the overall forecast for Canada remains strong with no provinces expected to experience a decline in price in 2011. It would continue an incredible run for housing, which has seen prices increase every year since 1998 with the lone exception being 2008, when prices dipped less than 1% nationally.

Sal Guatieri, senior economist with Bank of Montreal, says there is a “world of difference” between the Canadian and U.S. housing market.

“All things come to an end. At some point, the U.S. market has to bottom. Prices cannot fall forever,” Mr. Guatieri said. “Canadian house prices also cannot continue to rise, at least in some regions, faster than incomes forever.”

For now, strong job growth and low unemployment rates continue to help the Canadian market, he says. But we also benefit from a market not as overburdened by supply.

Canada Mortgage and Housing Corp. released statistics that show construction in Canada continues to slow. It said 179,000 homes were constructed on a seasonally adjusted annualized basis in April.

“That’s more in line with our demographic needs. There is little evidence of overbuilding in Canada’s housing market,” Mr. Guatieri said.

Business author Garth Turner said the intent of the housing industry is to foster an idea that the market is immune to any sort of collapse by using Vancouver sales to boost national statistics. “This mythology of an immune Canadian marketplace is just that: a myth,” he said.

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