Canadian home sales cool in November

Toronto, one of the biggest drivers of activity Photo: Bob Linsdell

Sales of Canadian homes cooled in November, experiencing the largest monthly drop since August 2012.

The country’s real estate was dealt a big blow by the introduction of a foreign buyer tax in Vancouver over the summer, which saw overseas interest weaken over the following weeks. While that measure was targeted, though, the government has since introduced wider mortgage regulations, which experts warned could push first-time buyers to the sidelines.

“November was the first full month in which the expanded stress-test was in effect for home buyers with less than a twenty percent down payment,” says CREA President Cliff Iverson. “The government’s newly tightened mortgage regulations have dampened a wide swath of housing markets, including places not targeted directly by the government’s latest regulatory measures.”

As a result, the number of transactions through Canadian MLS systems dropped 5.3 per cent month-on-month in November, the largest monthly dip recorded in four years.

Activity was down on a month-over-month basis in about two-thirds of all local markets, including Canada’s most active markets.

“Canadian housing market results for November suggest that Canada’s housing sector is unlikely to be as strong a source for economic growth as compared to before mortgage regulations were recently tightened,” adds Gregory Klump, CREA’s Chief Economist. “Housing activity generates a lot of spin-off spending, which makes its weakened prospects an additional source of uncertainty as regards the outlooks for Canadian economic and job growth.”

Actual (not seasonally adjusted) sales activity held 1.6 per cent above where it stood in November 2015 – the smallest year-over-year increase since October 2015. Annual activity gains in the Greater Toronto Area (GTA) were offset by declines in B.C.’s Lower Mainland.

The actual (not seasonally adjusted) national average price for homes sold in November 2016 rose 7.3 per cent year-on-year to $489,591.

“The national average price continues to be pulled upward by sales activity in Greater Vancouver and Greater Toronto, which remain two of Canada’s tightest, most active and expensive housing markets,” says the CREA. “That said, Greater Vancouver’s share of national sales activity has diminished considerably of late, giving it less upward influence on the national average price.”

 

Canada home sales up despite mortgage stress tests

17th November 2016

Home sales climbed in Canada during October, despite the introduction of new mortgage stress test rules.

The new rules require lenders to be extra sure that borrowers can afford any morgage they apply for. The rules changed in the middle of October, whch means that more time will be needed to determine its impact fully.

“The extent to which they will push first-time home buyers to the sidelines may vary among housing markets,” says Canadian Real Estate Association President Cliff Iverson.

Nonetheless, market activity was buoyant in October, with home sales rising 2.4 per cent month-month and the number of newly listed homes edging up by 1.7 per cent. On a non-seasonally-adjusted basis, sales activity rose 2 per cent year-on-year to set a new record for October.

Transactions were up from year-ago levels in about 60 per cent of all Canadian markets, with activity gains in the Greater Toronto Area (GTA) and environs offset by y-o-y declines in British Columbia’s Lower Mainland.

“First-time home buyers looking to get into the market before having to face tougher mortgage eligibility criteria had only two weeks to do so following the Finance Minister’s announcement of tighter mortgage regulations in early October,” comments Gregory Klump, CREA’s Chief Economist. “Early evidence suggests that the influence of tighter mortgage regulations on sales activity has been mixed. The federal government will no doubt want to monitor the effect of new mortgage regulations on the many varied housing markets across Canada and on the economy, particularly given the recent rise in uncertainty about economic growth prospects following the U.S. presidential election.”

Rising sales have driven up house prices once again in the country, with the MLS House Price Index jumping 14.6 per cent year-on-year and the national average sales price rising 5.9 per cent.

“The national average price continues to be pulled upward by sales activity in Greater Vancouver and Greater Toronto, which remain two of Canada’s tightest, most active and expensive housing markets,” says CREA.

Greater Vancouver saw prices jump 24.8 per cent, the second largest in the country, behind the Fraser Valley (32.5 per cent). Double-digit y-o-y percentage price gains were also registered in Greater Toronto (19.7 per cent), Victoria (20.1 per cent) and Vancouver Island (15.8 per cent).

The figures are released by the CREA as the country continues to monitor the impact of a new foreign buyer tax on property in Vancouver, designed to lower activity from overseas investors and help cool house prices. Indeed, Greater Vancouver’s share of national sales activity “has diminished considerably of late”, says the CREA, resulting in it having less upward influence on the national average price. Nonetheless, the average price across the country is reduced by more than $120,000 to $361,012, if Greater Vancouver and Greater Toronto sales are excluded from calculations.

Canada house prices continue climb, despite foreign tax

21st October 2016

Canada house prices continued to climb at the start of autumn, despite the introduction of Vancouver’s new tax on foreign investors.

The 15 per cent surcharge was introduced at the start of the third quarter of 2016, in an attempt to cool down foreign speculative investment in the market, thereby cooling down price growth.

According to The Royal LePage’s latest report, though, Canadian property prices rose 12 per cent year-on-year in Q3 2016, with a quarterly rise of 30.6 per cent recorded in Vancouver. The average house price rose to $545,414, with two-story home prices climbing 13.7 per cent year-on-year to $649,635, bungalow prices rising 11 per cent to $459,481 and condo values increasing 5.8 per cent to $360,679.

Ontario is considering introducing a similar charge of its own, with prices up 13.6 per cent in the Greater Toronto Area.

Phil Soper, President and Chief Executive Officer, Royal LePage, says the Greater Vancouver climb may be “a final hurrah” for this cycle of growth.

Indeed, the tax does appear to be having some initial impact: the latest CREA research shows that the average Canadian house price rose by 14.4 percent year-on-year in September 2016, down from 14.7 per cent in August – the first deceleration in the rate of growth since March 2015.

Townhouse/row unit and two-storey single family home posted the biggest annual increases in September 2016 (16.4 per cent and 16.3 per cent respectively). Price increases were close behind for one-storey single family homes (14 per cent) and apartment units (11.1 per cent).

Greater Vancouver and the Fraser Valley led growth with price rises of 28.2 per cent and 35 per cent respectively. However, single family home prices in both of these markets dropped from the month before, marking the first significant decline since late 2012.

Sales edged up 0.8 percent month-over-month in September 2016 across the country, but having eased in each of the previous four months, national home sales remain 5.6 per cent below the record set in April 2016.

 

Canadian home buyers hunt for bargains

27th September 2016

Canadian home buyers are hunting for bargains, as house prices remain above the average budget.

According to the CREA, the average house price climbed 14.3 per cent in July 2016, the biggest annual jump since November 2006. That price surge, fuelled by a supply shortage, is led mainly by Greater Vancouver and Toronto, where the housing markets have become particularly over-heated. Price growth varies across the country, but there is a notable trend among buyers to search for more affordable homes than the market average.

New research from Point2 Homes shows that 25 per cent Canadians are now searching for homes under $300,000, which is more than $150,000 below the average of $456,722. In Toronto, almost half (47 per cent) searching on Point2 Homes were looking for three-bed homes priced between $300,000 and $500,000, below the $710,410 average, while in Vancouver, the majority were looking for two-bed homes around $750,000, below the $1 million average.

This is partly due to the age of house-hunters, with most searches being carried out by Millennials (those aged between 25 and 34), followed by Generation X (35 to 44).

 

Canadian home sales fall for third month in a row

22nd August 2016

Sales of Canadian homes fell for the third month in a row in July 2016.

Figures from the Canadian Real Estate Association show that transactions via MLS fell 1.3 per cent month-over-month in July 2016. With similar monthly declines having been posted in May and June, national sales activity in July came in 3.9 per cent below the record set in April 2016.

Sales activity was down from the previous month in slightly more than half of all markets in July, led by Greater Vancouver and the Fraser Valley. Transactions in these two markets peaked in February of this year, and have since then dropped by 21.5 and 28.8 per cent respectively. Accordingly, much of the national sales decline in recent months reflects slowing activity in B.C.’s Lower Mainland.

“National sales and price trends continue to be heavily influenced by a handful of places in Ontario and British Columbia and mask significant variations in local housing market trends and conditions across Canada,” says CREA President Cliff Iverson.

“Home sales continued to trend lower while price gains further accelerated in the Lower Mainland of British Columbia,” adds Gregory Klump, CREA’s Chief Economist. “This suggests that sales are being reined in by a lack of inventory and a further deterioration in affordability. The new 15 per cent property transfer tax on Metro Vancouver home purchases by foreign buyers took effect on August 2nd, so it will take some time before the effect of the new tax on sales and prices can be observed. That said, the new tax will do little in the short term to increase the supply of homes.”

With supply low, price rises continue to post strong results, with the aggregate composite house price index climbing 14.3 per cent year-on-year in July 2016, the biggest gain since November 2006.

For the sixth consecutive month, y-o-y price growth accelerated for all Benchmark property types tracked by the index. Greater Vancouver (32.6 per cent) and the Fraser Valley (+37.6 per cent) posted the largest y-o-y gains by a wide margin, followed by Greater Toronto (16.7 per cent), Victoria (17.5 per cent) and Vancouver Island (+11.6 per cent).

Home prices rose modestly in Regina (2.7 per cent y-o-y), Greater Montreal (1.8 per cent y-o-y) and Ottawa (1.1 per cent y-o-y). Greater Moncton recorded its largest y-o-y home price increase (8.4 per cent) among an unbroken string of gains posted every month over the past year.

 

Record property sales in Toronto – but where’s the supply?

8th August 2016

Toronto’s housing market market enjoyed a record month in July 2016, but there’s a fly in the ointment: a shortage of new listings.

According to the Toronto Real Estate Board, 9,989 home sale were completed through the MLS system in the Canadian city last month – the best result on record for the month of July.

While sales were up on a year-over-year basis, though, the number of listings was down, highlighting on ongoing trend that the TREB says is “troubling”: demand is up, but what about supply?

“GTA Realtors have been working very hard on behalf of their buyer clients to help them find a home meeting their needs,” says President Larry Cerqua. “Unfortunately, listings for single-detached and semi-detached houses and townhouses continue to be in short supply. The result has been an increase in pent-up demand and annual rates of price increases well above the rate of inflation. Housing policy is now top of mind for all levels of government. Policy makers need to be focusing on solutions to the sustained lack of low-rise inventory throughout the GTA.”

With low mortgage costs, a strong labour market and incomes rising above inflation, conditions are ripe for buyers to purchase homes, but with such a shortage of listings, that mismatch is forecast to keep pushing up prices.

Indeed, the average selling price for all home types combined was up by 16.6 per cent year-over-year in July to $709,825.

Canadian homes sales still falling, prices still climbing

18th July 2016

Canadian home sales continued to fall in June 2016, but prices keep on climbing.

The number of homes trading hands via Canadian MLS systems fell 0.9 per cent from May 2016, according to the latest figures from the Canadian Real Estate Association. This is the second monthly decline in a row, taking sales activity down to 2.6 per cent below the record set in April 2016.

Sales activity was down from the previous month in about half of all markets in June, with declines in Greater Vancouver, the Fraser Valley and Greater Toronto having eclipsed gains in comparatively less active housing markets.

“As was the case in May, the monthly decline in national sales activity was led by the Lower Mainland of British Columbia and markets in or around the GTA. In keeping with the law of supply and demand, exceptionally low inventory combined with high demand continues to translate into strong price growth in these housing markets, where year-over-year price gains have been running in double-digit territory since late last year,” says Gregory Klump, CREA’s Chief Economist.

Actual (not seasonally adjusted) sales activity was up 5.2 per cent year-over-year in June 2016. Year-over-year increases have been steadily losing momentum since February 2016.

The number of newly listed homes rose by 2.2 per cent in June 2016 compared to May. New supply climbed among a broad majority of all local markets, led by Greater Toronto, Oakville-Milton, Montreal, Quebec City, and B.C.’s Fraser Valley. The return of activity in Fort McMurray following its evacuation in May also contributed to the national increase in new listings.

With sales down and new listings up, the national sales-to-new listings ratio eased to 63.3 per cent in June 2016, compared to 65.3 per cent in May.

Nonetheless, the Aggregate Composite MLS Benchmark price rose by 13.6 per cent year-on-year to $564,700 in June 2016, the biggest gain since December 2006. For the fifth consecutive month, y-o-y price growth accelerated for all property types.

While prices in 9 of the 11 markets tracked by the MLS HPI posted annual gains in June, though, price growth continues to vary widely among housing markets.

“While national sales activity remains strong, there are still significant differences in housing market trends across Canada,” says CREA President Cliff Iverson. “While home sales activity and price growth are running strong in B.C. and Ontario, they remain subdued in other markets where homebuyers are cautious and uncertain about the outlook for their local economy.”

Greater Vancouver (up 32.1 per cent) and the Fraser Valley (35.5 per cent) posted the largest annual gains, followed by Greater Toronto (16 per cent), Victoria (15.7 per cent), and Vancouver Island (10.6 per cent). By contrast, prices were down 4.1 per cent and 1.4 per cent year-on-year in Calgary and Saskatoon, respectively.

Home prices gained further traction in Regina (3.6 percent), Greater Montreal (1.9 per cent), and Ottawa (1.0 per cent). Home prices in Greater Moncton recorded their eleventh consecutive year-over-year gain, rising 7.9 per cent.

The national average price continues to be pulled upward by sales activity in Greater Vancouver and Greater Toronto, which remain two of Canada’s tightest, most active and expensive housing markets. The actual (not seasonally adjusted) national average price for homes sold in June 2016 was $503,301, up 11.2 percent y-o-y.

If these two housing markets are excluded from calculations, the average price is a more modest $374,760 and the gain is trimmed to 8.4 per cent.

Canadian home sales drop after record-breaking April

16th June 2016

Canadian home sales slipped in May 2016, following a record-breaking April.

The number of homes trading hands fell 2.8 per cent month-on-month in May 2016, according to the Canadian Real Estate Association. Sales activity dropped in May from the previous month in 70 per cent of all markets, led by those in British Columbia and Ontario, where the number of homes listed for sale has fallen to multi-year or all-time lows.

“National sales activity is still strong, even after coming off the record levels of the past couple of months,” says CREA President Cliff Iverson. “But, there are housing markets where sales continue to reflect a cautious mood among homebuyers and uncertainty about the local economy. All real estate is local, and REALTORS® remain your best source for information about sales and listings where you live or might like to in the future.”

“Many of the housing markets in BC and Ontario that led the monthly decline in national sales are also places where months of inventory have fallen to all-time lows,” says Gregory Klump, CREA’s Chief Economist. “This suggests a lack of supply may be starting to rein in sales amid a continuation of strong housing demand.”

Canadian property market has busiest ever April

24th May 2016

Canadian home sales have broken another record, following the market’s most active April ever.

Actual (not seasonally adjusted) sales activity rose 10.3 per cent from one year ago to shatter all previous records for the month of April, according to the Canadial Real Estate Association, as well as marking the second highest level for transactions for any single month.

The number of homes trading hands via Canadian MLS systems rose by 3.1 per cent month-over-month, with transactions up in about 70 per cent of all local markets – led by the National Capital Region and Edmonton. Following small declines in the previous month, activity held steady in the Greater Toronto Area (GTA) and edged lower in Greater Vancouver.

“Nstional home sales set new monthly records over the past two months, even as activity in Greater Vancouver and the GTA appears to have topped out,” says CREA President Cliff Iverson. “With almost three-quarters of all local markets posting sales gains in April, there are plenty of other places where sales are climbing as we head into the busiest time of the year for homebuyers.”

“Supply shortages and tight housing market conditions have become self-reinforcing in the GTA,” adds Gregory Klump, CREA’s Chief Economist. “The Greater Vancouver Area appears to be heading in that direction too. While significant home price gains may entice some homeowners in these markets to list their home for sale, the issue for many is that the decision to move means they would also be looking to buy while competition for scarce listings is fierce. As a result, many homeowners are deciding to stay put and continue accumulating capital gains.”

Canadian home sales hit record high

18th April 2016

Home sales in Canada have hit a record high this March, as the housing market springs forward.

Transactions rose 1.5 per cent month-on-month across the country, according to the Canadian Real Estate Association. 60 per cent of regions saw sales climb, including Victoria, Chilliwack, the Okanagan Region, Edmonton, Calgary, Woodstock-Ingersoll, Kingston, Barrie and Montreal, offsetting a decline of 0.3 per cent in Greater Vancouver and 1.8 per cent in the Greater Toronto Area.

Overall, activity climbed to an all-time high for March, with actual (not seasonally adjusted) sales up 12.2 per cent compared to March 2015. Even Canada and Toronto’s slightly declining markets remained near the record highs reached the month before.

“Greater Vancouver and the GTA are heading into the spring home buying season with soaring demand and a shortage of listings,” says CREA President Cliff Iverson. “Meanwhile, other major urban markets in Canada are well balanced or are amply supplied.”

“Single family home sales in the Lower Mainland of BC and the GTA set new records for the month of March in the range between a-half and one-million dollars – as did sales above a million dollars,” adds Gregory Klump, CREA’s Chief Economist.

“Meanwhile, sales below a half-a-million dollars, which were not subject to recently tightened mortgage regulations, are being increasingly restrained in these markets by a short supply of listings. If current sales and listings trends persist, price gains may pick up further this spring.”

Prices are already climbing, fuelled by the growing demand, with the CREA’s house price index rising 9.1 per cent year-on-year, the biggest gain recorded since June 2010.

Canadian home sales rise for second month in a row

16th March 2016
Canadian home sales have risen for a second month in a row this year, but the data hides an unbalanced market.

New figures from the Canadian Real Estate Association show that the number of homes trading hands via Canadian MLS Systems rose by 0.8 per cent in February 2016 compared to January.

The monthly increase lifted national sales activity to the highest level since June 2007.

The figures highlight the growing imbalance in Canada’s housing market, as Toronto and Vancouver continue to drive activity. Indeed, a greater number of local housing markets posted a monthly decline in sales activity than posted a monthly increase, but the latter accounted for a larger share of national transactions.

The Greater Toronto Area, Okanagan Region and Fraser Valley made the largest contribution to the monthly increase in national sales activity, offsetting monthly sales declines in Edmonton, Greater Moncton and Montreal.

“Two of Canada’s hottest housing markets look set to stay that way heading into the spring home buying season,” says CREA President Pauline Aunger. “Meanwhile, other major urban markets elsewhere in Canada are well balanced or have ample supply.”

Actual (not seasonally adjusted) sales activity rose 18.7 per cent on a year-over-year basis in February 2016, standing 12.7 per cent above the 10-year average for the month. Activity increased above year-ago levels in February in about three-quarters of all local markets. B.C.’s Lower Mainland, the GTA and Montreal contributed most to the year-over-year increase in national activity.

To highlight the uneven nature of the market’s performance, the CREA data also highlights that the number of single family home sales above one million dollars is rising in Greater Vancouver and the GTA.

“Tightened mortgage regulations apply to homes selling above five hundred thousand dollars and below a million dollars. The tighter regulations combined with a short supply of single family homes will restrain transactions below one million dollars,” comments Gregory Klump, CREA’s Chief Economist. “If recent trends continue, home sales above one million dollars will account for a greater share of activity and will further fuel year-over-year average price increases in these markets. Meanwhile, price growth will remain more modest in other housing markets that don’t have an ongoing or developing supply shortage like the kind we’re seeing in the Lower Mainland of British Columbia or around the GTA.”

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