The Globe and Mail came out with this article today detailing a 7% rise in home sales for March which is the second straight month of improving sales. It is an interesting article but what you have to remember is that spring and summer are typically the busiest times of the year for home sales. In Kamloops, we have seen the real estate market pick up over the last month and that is to be expected as we head into spring and summer. The full article is included below.
The Canadian housing market appears to be stabilizing, with sales activity up in March for the second consecutive month as lower prices drew in more buyers, the Canadian Real Estate Association said Wednesday. Actual transactions were down 13.7 per cent, year over year. This was the smallest decline in six months, the association said. “Housing markets are starting to show signs of buyer interest because of lower prices and interest rates,” Regina real estate agent Dale Ripplinger, CREA president, said in releasing the March results. However, economists were reluctant to characterize the increased sales activity as the beginning of a recovery in the real estate market.
The March statistics were “certainly encouraging,” Toronto-Dominion Bank economist Millan Mulraine said. “Nevertheless, with the Canadian economy continuing to be in a very intense recession, and labour market conditions continuing to worsen at an alarming pace, we expect over-all housing market activity to remain soft in the coming months,” Mr. Mulraine said in a research note. “That’s why we are cautious about interpreting this as the beginning of a long-term trend,” he added in an interview.
A seasonally adjusted total of 31,135 existing homes changed hands in March. “This is an increase of 7 per cent from the previous month, and builds on the 10.3-per-cent activity gain in February,” CREA said in a news release. “The number of transactions in March stands 18 per cent above levels reported in January, 2009, when activity sank to the lowest level in a decade.”
The national average resale price was $288,641 in March, down 7.7 per cent from a year earlier – again, the smallest year-over-year decline in six months, the association said. The largest monthly increases in activity were in British Columbia, at 13.6 per cent, and Ontario, at 10.5 per cent, the association said.
CREA’s chief economist, Gregory Klump, said the sales reflected a “stronger-than-normal seasonal bounce” in a number of markets. “The story is that price reductions are working as intended. They are stabilizing the market and they are drawing buyers …who are taking advantage of improved affordability,” Mr. Klump said, adding that anecdotal evidence indicates that a lot of the buyers are first-time market entrants. “Looking back to economic recessions in the early 1980s and 1990s, national resale housing activity bottomed out before the job market or economy did,” Mr. Klump said. “It will take time for ample supplies of new and existing homes to be drawn down, but demand appears to be stabilizing.”
Bank of Montreal economist Robert Kavcic noted that, despite the recent improvement, sales activity is still down more than 30 per cent from the peak seen in May, 2007. “Still, the improvement in recent months is an encouraging sign that the Canadian housing market has crossed the halfway point for this downturn,” Mr. Kavcic said. “Affordability is the highest in about four years, which should help fuel a rebound in sales once the job market stabilizes,” he said in a research note.
Recent measures in the new federal budget, including an increase in the maximum withdrawal allowed under the Home Buyers Plan and the First Time Buyer Tax Credit, will also lend support to new buyers, Mr. Kavcic said. “While a continued gradual decline in new listings—down 10.9 per cent year-over-year in seasonally adjusted terms—will ultimately help restore the market to balance, the ratio of new listings-to-sales remained slightly elevated at 2.2 per cent in March. “Over-all price declines are still somewhat exaggerated by the changing sales mix (sharper declines in the most expensive cities and higher price ranges), and as such, weighted-average prices are down a more modest 4.7 per cent year-over-year. Still, a widespread 14 of 25 cities are reporting lower prices versus last year,” Mr. Kavcic wrote.
“Western Canada continues to face the most severe price pressure, with average home values still down more than 10 per cent year-over-year in each of Vancouver, Victoria, Calgary and Edmonton. Hard-hit manufacturing centres in Ontario are also posting double-digit declines, while Regina and St. John continue to lead the pack, up 16 per cent year-over-year and 13 per cent year-over-year respectively.” Mr. Kavcic said it remains a buyers’ market. “Further price declines and low mortgage rates will ultimately help trigger a recovery, but a reversal in the wave of job losses is one major pre-requisite still outstanding,” he said.