Category: National Real Estate News

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.

This article was written by Julian Beltrame of The Canadian Press on October 28th, 2013.

OTTAWA – Finance Minister Jim Flaherty is taking on the responsibility of averting a housing bubble in Canada that could destabilize the economy, adding he will speak to those in the business to try and keep a lid on rising home prices.

With the Bank of Canada essentially taking itself out of the game by signalling interest rates won’t be raised for some time, Flaherty said Monday after meeting with about a dozen economists that it falls on his department to ensure the market is stabilized.

“It does fall to the Department of Finance to do anything if we’re going to do anything because there’s basically no room for the Bank of Canada to move,” he said. “Some of the economists suggested I have some conversations with people in the building industry because what we’re seeing in certain parts of the country (is) a re-acceleration of housing prices. I do speak regularly to people in the business and I’m going to do more of it now.”

Flaherty said he has no intention of acting at the moment, but said he was keeping an eye on the market to see if the current uptick in sales and prices is temporary or the beginning of another hot run.

Most economists see the market slowing after the recent resurgence, including the Bank of Canada. But the central bank also cited the “renewed momentum” as one of three domestic risks to the economy in its October monetary policy report. “This (the resurgence) would provide a temporary boost to economic activity, but could exacerbate existing imbalances and therefore increase the probability of a correction later on,” the bank said. “Such a correction could have sizable spillover effects to other parts of the economy and to inflation.”

The minister has been active in the housing market throughout his tenure, at first easing rules but more recently clamping down as Canadians took on ever-increasing debt levels to buy real estate.

The latest measure, which came in July 2012, was followed by a slump in sales and a slowdown in price gains. But the market began picking up again during the summer, particularly in Toronto and Vancouver, with the average home price hitting a new record high of almost $386,000.

Home prices are not Flaherty’s only worry.

The minister told reporters he remains focused on trying to eliminate as much as possible the price gap between the United States and Canada that one recent report pegged at about 10 per cent. Flaherty said he has been meeting with CEOs of the country’s major retailers to ask for explanations as to why prices for the same items remain elevated in Canada, adding that he is not altogether persuaded by the answers he has been given.

“There are some companies that look at Canada as a relatively small market that is relative well off, (with a) large middle class, and, ‘Let them pay a little more, and they’ll pay it.’,” he said of merchant attitudes. However, Flaherty said he will wait until the results of a study being conducted by the market research firm Nielsen before deciding if anything needs to be done.

“It becomes an interesting question of what the government can do about that … there are always persuasive techniques that can be used to nudge people in the right direction,” he said. The minister has deployed the approach before.

Earlier this year he personally phoned the Bank of Montreal to “persuade” it to raise its five-year fixed mortgage rate after BMO cut it to 2.99 per cent. Flaherty said he was concerned about a race to the bottom on rates that would trigger unsustainable borrowing.

This article appeared on CBC News on October 15th, 2013.

Canadian home sales posted a small month-over-month increase in September and the national average sale price rose but the number of new listings declined, according to the Canadian Real Estate Association.

Home sales were up just 0.8 per cent from August to September, while overall activity remained on par with the 10-year average in September, CREA said.

However, last month’s sales were up 18.2 per cent compared with September 2012 and the average sale price was up 8.8 per cent to $385,906.

Robert Kavcic, senior economist at BMO Capital Markets, highlighted regional shifts as the reason for the spike from last year.

“Regionally, the big story continues to be the snap-back in Vancouver, where sales were up a towering 64.3% year over year in September,” he said in a note to investors.

However, Kavcic says that stripping out volatile markets like Vancouver and Toronto shows a balanced housing market.

“Any worry about a hard landing in Canadian housing has quickly become a faint memory, and underlying conditions are more balanced than the flashy headline results suggest.”

Looking forward, Kavcic sees a softer market by no need for alarm. “Sales in September 2012 [were] slumping in the wake of stricter mortgage rules,” he said.

The association’s MLS Price Index, which is less volatile as it adjust for the characteristics of houses sold, rose by a more modest 3.1 per cent.

“Year-over-year increases in the sales over the past couple of months highlight how activity softened across much of the country following the introduction of tighter mortgage rules last summer,” said Gregory Klump, CREA’s chief economist.

“While the momentum for sales activity began improving a few months ago, it may be losing steam after having only just climbed back in line with an average of the past 10 years,” he added.

About 340,980 homes have traded hands across the country so far this year, or 1.8 per cent below levels recorded in the first three quarters of 2012.

There were 1.4 per cent fewer newly listed homes in September compared with August, the association said, adding that while the Canadian housing market has tightened, it continues to remain balanced.

Greater Vancouver, Fraser Valley, Calgary, Greater Toronto, London, St. Thomas, Ont., Ottawa and Montreal all saw listing declines.

The Canadian Real Estate Association is one of Canada’s largest single-industry trade associations, representing more than 106,000 realtors working through more than 90 real estate boards and associations.