But now that prices are finally falling and affordability is increasing, there is another major stumbling block in their search: Job security.

“There just seems to be so much uncertainty. Prices in the range we have been looking at haven’t changed all that much, either,” said Mr. Withers.

“We keep waiting for the big housing crash,” said Ms. Harding.

They look to the situation in the United States and see prices dropping by as much as a third in many markets, but that hasn’t happened here. The Canadian Real Estate Association said prices across the country in the first four months of 2009 were down 6.7% compared with a year ago.

That’s the real-estate rub: Sales have stalled as vendors refuse to lower prices while buyers sit on the sidelines waiting for a deal after more than a decade of rising prices.

To be sure, the deals have finally begun to materialize, although not from plummeting prices. Rather, record-low interest rates, whether consumers are borrowing long-term or short, are a key factor in the new real-estate affordability.

Consider a $300,000 mortgage. At the 3.75% rate some mortgage brokers claim they can get for a five-year closed mortgage, the monthly payment is $1,537.67, based on a 25-year amortization. A couple of years ago, when the rate was closer to 5.75%, the same mortgage would cost 22% more, or $1,875.07 a month.

Cheap money has created a classic economic battle. In one corner stands the real estate industry, trying to lure buyers with rates so low it is now cheaper to own than to rent. In the other is the skittish consumer who is too focused on job concerns to care about interest rates.

For the first time this decade, the Royal Bank of Canada’s Affordability Index, which measures the percentage of household income needed to carry a home, is declining.

“We’ve seen affordability improve across the board, but especially in some centres where it had deteriorated over the past few years,” said Robert Hogue, senior economist with RBC.

Financial Post — Peter J Thompson

reviewed by Moishe Alexander, CFC CEO