Category: National Real Estate News

This article appeared on the Canadian Business website on March 7th, 2012 and was written by Sunny Freeman of the Canadian Press.

The number of Canadian homes sold this year will outpace 2011 while prices will hold steady in most parts of the country, the country’s largest real estate association said Monday in a rosy revision to its 2012 outlook.

The Canadian Real Estate Association said the number of home sales will grow by 0.3 per cent this year to 458,800 from 457,305 units in 2011, largely due to the continuation of low borrowing rates.

The national average price is forecast to dip by 1.1 per cent in 2012 to $359,100 but that’s due to a drop-off in multi-million dollar sales activity in Vancouver —Canada’s most expensive real estate market..

Prices are expected to remain around current levels in most parts of the country, CREA said.

The most recent forecasts reversed those CREA gave in November, when it expected home sales to fall by 0.5 per cent this year, and the national average home price to hold steady at $362,700.

The revisions come at a time when central banks in Canada and the United States are keeping their key lending rates low to counter the economic drag caused by the European debt crisis.

“Risks to the Canadian economic outlook remain elevated owing to the European sovereign debt quagmire, but the continuation of low interest rates is the silver lining,” CREA chief economist Gregory Klump said.

“So long as the European debt crisis is contained and a global economic recession avoided, low interest rates will support Canadian home sales and prices.”

CIBC economist Benjamin Tal said the new CREA forecast is much more in line with what he is projecting, and if anything it is “a best case scenario” forecast, with his bias being toward an expectation of more significant price declines.

“This is basically a stagnating housing market,” Tal said.

“This is not a housing market that is going to be on fire. This is a housing market that you’ll see activity moderating and prices actually going down.”

CREA expects Alberta, Saskatchewan, and Nova Scotia will drive the sales growth this year, offsetting weakness in British Columbia, Ontario, and New Brunswick.

In Vancouver, prices are already falling from sky high levels a year ago, especially in the once bustling condominium market, and prices elsewhere in country are not rising significantly to offset those big declines, Tal noted.

By contrast, sales and prices are still moving higher in Toronto, with sales up 16 per cent from last February and prices up 11 per cent.

However, a stagnating market is “exactly what we need to see” over the next few years to avoid a housing bubble that could burst, Tal noted.

“I think even real estate agents will tell you that another year of crazy activity with house prices rising by 10 per cent would not be good for their business from a long-term perspective.”

Sales are now expected to pull back by 0.3 per cent to 457,200 units in 2013, with prices rising 0.9 per cent to a national average of $362,300, CREA said.

Ontario is expected to weigh down the national results, as it is the only province not expected to make “modest gains,” CREA said.

The outlook would put national sales activity on par with the 10-year average for annual activity, the agency noted.

The Bank of Canada and some economists have warned that Canadians are piling on too much mortgage debt while interest rates are low, and some may no longer be able to afford their homes when interest rates rise.

One paper issued by the central bank suggested that home prices have been influenced not only by low mortgage rates but also on expectations that values will keep rising.

Meanwhile, CREA’s Klump has steadfastly declared Canada’s housing market is healthy, and is more likely in for what he calls a “soft landing.”

“Recent trends are reassuring, but interest rates remaining low for longer will doubtless keep the Canadian housing market under scrutiny for signs of overheating,” Klump said.

Tal believes that if there is a reacceleration of activity, the federal government would step in again with new mortgage rules to curb activity. Meanwhile, the central bank is unlikely to raise interest rates to soften the market because it is too broad of a tool that could hit other sectors hard.

“The real measure of intelligence is what you do when you don’t know what to do,” Tal said.

“And what you do when you don’ you don’t take chances so this fog of uncertainty will prevent it from switching policy any time soon.”

This article appeared in the Economic Times on February 24th, 2012.

OTTAWA: Canadian homeowners are loading themselves with too much debt and face serious problems if house values start to drop, the Bank of Canada warned Thursday.

For months, some economists have warned that Canada is in the middle of a housing bubble, with prices in many cities doubling in the past five years. House prices are now out of reach of most working and professional families in the country’s four largest major cities.

“There has been a steady rise in Canadian household indebtedness,” the Bank of Canada said in the winter issue of the Bank of Canada Review, a quarterly publication of academic articles.

“Households could therefore experience a significant shock if house prices were to reverse.”

A large correction in the housing market would hurt the Canadian economy by having “a relatively large impact on consumption”, Xinhua quoted the report as saying.

Still, the bank said other countries have seen worse housing issues.

“The Canadian housing market has not exhibited the excesses seen in other countries,” the bank said in the Review.

The bank says consumer spending pulled Canada out of recession in 2009. Unlike the US, Canada did not see a major drop in housing prices in the last recession, and house prices have continued to grow since then.

Canadian home buyers have been spurred on by easy credit and low interest rates, with banks offering mortgages at historically low rates below 3 percent. The ratio of mortgage debt to disposable income has increased to almost 100 percent from about 50 percent over the last 30 years, the report said.

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This article appeared on the DigitalJournal.com on February 15th, 2012 (from Canada NewsWire).

OTTAWA, Feb. 15, 2012 /CNW/ – According to statistics released today by The Canadian Real Estate Association (CREA), national resale housing activity retreated in January 2012 from the strong finish reported for December 2011.

Highlights:

•   Home sales were down 4.5% from December to January.
• Actual (not seasonally adjusted) activity came in 4.0% above levels in January 2011, and stood even with the 5 and 10 year averages for January sales.
• The number of newly listed homes edged down 1.4% from December to January.
• With sales down by more than new listings, the national market shifted further into balanced territory.
• The national average home price was up less than 2% year-over-year in January, ranking it among the smallest increases of the past year.

Sales activity recorded through the MLS® Systems of real estate Boards and Associations in Canada fell 4.5 per cent from December 2011 to January 2012. This marks the first monthly decline in national activity since August 2011 and the biggest monthly decline since July 2010. The monthly decline reversed a string of monthly increases over the closing months of last year, and returned national activity to where it stood at the end of the third quarter of 2011.

“The national housing market is stabilizing and remains well balanced,” said Gary Morse, CREA’s President. “That said, forecasts for economic and job growth going forward vary widely for different parts of the country, suggesting a possible continuation of a softening trend in some markets, as well as the potential that demand will pick up based on strong fundamentals in others. All real estate is local, so talk to your local REALTOR® to understand how price trends in your neighbourhood are shaping up.”

Activity was down in over half of all local markets in January from the previous month. Led by declines in Greater Toronto and Montréal, demand also softened in a number of other major urban centres including the Fraser Valley, Calgary, Edmonton, Winnipeg, Ottawa, and Greater Vancouver.

Actual (not seasonally adjusted) national sales activity was up four per cent from year-ago levels in January, the smallest year-over-year increase since last May. As was the case in a number of months last year, actual sales in January 2012 stood close to the five and ten year average for the month.

The number of newly listed homes edged down 1.4 per cent on a month-over-month basis in January following a 2.9 per cent increase in December. The monthly decline in new supply reflects a drop in new listings in a number of Canada’s largest urban centres, which offset a jump in new listings in Vancouver.

Sales fell in January shifting the national market back towards the mid-point of balanced territory and reversing the recent trend which had seen the market becoming tighter over the final four months of 2011. The national sales-to-new listings ratio, a measure of market balance, stood at 53.8 per cent in January, down from 55.5 per cent in December and 55.4 per cent in November.

Based on a sales-to-new listings ratio of between 40 to 60 per cent, 60 per cent of local markets were balanced in January. Compared to December, there were fewer buyers’ and sellers’ markets, and a greater number of balanced markets.

The number of months of inventory stood at six months at the end of January on a national basis, up from 5.7 months in December 2011 and returning it to where it stood in October 2011. The number of months of inventory represents the number of months it would take to sell current inventories at the current rate of sales activity, and is another measure of the balance between housing supply and demand.

The actual (not seasonally adjusted) national average price for homes sold in January 2012 was $348,178, representing an increase of 1.2 per cent from its year-ago level. This ranks among the smallest increases since late 2010.

On a seasonally adjusted basis, the national average home price rose 1.6 per cent on a month-over-month basis, marking a rebound from a decline of similar magnitude in December. This pattern mirrors the one playing out in the newly-launched MLS® Home Price Index (HPI), published on February 6.

“Year-over-year comparisons in the national average price are expected to become volatile and may turn negative, reflecting average price developments in the first half of 2011 in Vancouver,” said Gregory Klump, CREA’s Chief Economist. “At that time, high-end home sales in Vancouver’s priciest neighbourhoods surged to all-time record levels, which skewed the national average price upward considerably. A replay of this phenomenon is not expected this year. As a result, comparisons for national average price to year-ago levels over the coming months will reflect an upwardly skewed base effect. For this reason, year-over-year comparisons should be kept in perspective. Developments in the MLS® HPI will provide important guidance on price trends, since it is not affected by the problem of compositional shifts in the mix of sales activity.”

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