Category: National Real Estate News

Canada Housing Starts Top Expectations; Canada Housing Starts Came in at 198,185 Annual Rate In June 2014. This article appeared on the Wall Street Journal and was written by Don Curren.

Canadian housing starts advanced 0.6% in June from May to an annualized rate of 198,185 units, Canada Mortgage and Housing Corp. said Wednesday.

The results exceeded economists’ expectations, which were for annualized starts of about 190,000 units, according to CIBC World Markets. It said June marked the third straight month of housing starts close to 200,000 units, going “against the conventional reasoning that 2014 would bring with it the expected slowdown in the Canadian housing boom.”

Some analysts are still worried Canada’s housing market could suffer a sharp correction. Sustained strength in housing starts isn’t all positive from that point of view, because it suggests the market is not yet cooling down.

“The resiliency of the Canadian housing market has surprised expectations for a transition to lower, more sustainable levels and the latest monthly reading is no exception,” said a report from Royal Bank of Canada.

It said the recent outperformance of Canadian building permits and the persistence of low mortgage rates provide upside risk for new housing demand to remain elevated in the near term.

The recovery from earlier harsh weather distortions is expected to give way to levels of home-building activity that are closer in line with household formation in the coming months, RBC said.

“We remain of the view that recent robust levels of housing starts are unlikely to be maintained over the second half of the year and into 2015,” it added.

Last month’s results brought the six-month trend in housing starts to almost 186,000 units from slightly more than 184,000 units in May, CMHC said in Wednesday’s release.

In June, urban starts rose to 181,979 units, reflecting a decline in multiple starts but an increase in single-detached starts. Urban starts were up in Atlantic Canada and the Prairies but down in Quebec, Ontario and British Columbia, CMHC said.

National Bank Financial said the fact that June housing starts were tilted towards single-detached homes is encouraging news because it suggests a stabilization in the multiple sector–mainly condominiums– after earlier overbuilding in that category.

National Bank said single-detached units contribute more to economic growth than multiples, which bodes well for housing’s contribution to economic growth in the second quarter.

This article appeared on CBC.ca on January 15th, 2014.

The average price of a Canadian home increased 10.4 per cent to $389,119 in December, compared to the same month in 2012.

The Canadian Real Estate Association (CREA) released data Wednesday showing that a total of 457,893 homes changed hands in Canada last year, an increase of about 0.8 per cent from 2012’s level.

MAP: House prices across Canada

“Absent further mortgage rule changes,” CREA’s chief economist Gregory Klump said, “sales in 2014 may surpass the annual total for 2013 if demand holds steady near current levels as strengthening economic and better job growth offset the impact of further expected marginal mortgage interest rate increases.”

As has been the case for some time now, CREA says the large jump in prices was largely due to what was happening in Canada’s most active and expensive markets.

Broad gains

Sales activity in December 2012 in Toronto and Vancouver was abnormally low, which dropped the national average at that time.

“Removing Greater Vancouver and Greater Toronto from national average price calculations cuts the year-over-year increase to 4.6 per cent,” CREA said.

CREA says the average price can be misleading, as it can be too easily influenced by individual factors.

The realtor group says its MLS Home Price Index “provides a better gauge of price trends because it is not affected by changes in the mix of sales activity the way that average price is.”

That index shows home prices rose 4.31 per cent over the past 12 months. Gains were seen in all housing types.

The index was led by an 8.7 per cent gain in Calgary and a 6.3 per cent gain in Toronto.

Vancouver’s market index posted a second straight increase of 2.13 per cent after declines for much of the time between late 2012 and late 2013.

Soft landing?

Economists and policy-makers have been scrutinizing the Canadian housing market for indications of weakness and warning signs of a possible crash.

However, BMO senior economist Robert Kavcic said it was hard to find evidence to suggest anything but a soft landing for the market.

“Look for current balanced conditions and somewhat higher interest rates to lead to steady sales this year, with price growth tucked neatly below the rate of income growth,” Kavcic said.

This article was posted on CBC.ca on January 15th, 2014 and was written by Craig Wong of The Canadian Press.

OTTAWA — Canadian home sales were up from a year ago in December, but slid lower compared with the previous month for the third consecutive time, the Canadian Real Estate Association says.

The industry association said Wednesday that the number of sales last month was up 12.9 per cent compared with December 2012, and the national average price was up 10.4 per cent to $389,119.

However the December’s sales, through the multiple listing service, were down 1.8 per cent from November, continuing a downward trend that began with CREA’s October report.

Read more: http://www.ctvnews.ca/business/home-sales-in-canada-down-in-december-crea-1.1640078#ixzz2qa3VrnmV

“Activity has gradually eased back from stronger than expected levels last summer and is now roughly in line with the 10-year monthly average,” CREA president Laura Leyser said.

“We’ll likely continue getting mixed signals in the months ahead, with positive year-over-year comparisons for sales masking the recent moderation in the monthly sales trend.”

For the full year, there were 457,893 homes sold through the MLS system, up eight-tenths of a per cent from 2012.

Economists and policy-makers have been scrutinizing the Canadian housing market for indications of weakness and warning signs of a possible crash.

However, BMO senior economist Robert Kavcic said it was hard to find evidence to suggest anything by a soft landing for the market.

“Look for current balanced conditions and somewhat higher interest rates to lead to steady sales this year, with price growth tucked neatly below the rate of income growth,” Kavcic said.

TD economist Diana Petramala noted that some of the weakness in December may have been due to the freezing weather.

“However, higher mortgage interest rates appear to be taking some steam out of home demand, particularly for first time homebuyers,” Petramala wrote in a report.

“Five-year mortgage rates have risen by 70 basis points since May. Going forward, a continued increase in longer term interest rates will offset improving economic conditions, helping to keep home sales stable in 2014 and 2015.”

While home sales in December were down compared with November on a national basis, roughly 60 per cent of the local markets across the country saw lower sales.

Declines in Calgary, Edmonton and Toronto more than offset gains in Vancouver, the Fraser Valley and St. Catharines, Ont.

Meanwhile, the number of newly listed homes fell 4.3 per cent on a month-over-month basis in December.

The national sales-to-new listings ratio climbed to 55 per cent in December compared to 53.6 per cent in November.