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Home Sales in Canada Up 0.8% in First weeks of 2016


Under Market Updates

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March 16th, 2016

National home sales in Canada rose by 0.8% from January to February while average prices were up by 16.4% year on year, the latest index shows.

But prices fell in some regions, most notably British Columbia and Ontario with a fall of 1.4%, according to the data from the Canadian Real Estate Association also shows.

The number of newly listed homes edged up by 0.5% from January to February and the CREA report says that the Canadian housing market has tightened but remains balanced overall.

The monthly increase lifted national sales activity to the highest level since June 2007 but a greater number of local housing markets posted a monthly decline in sales activity than posted a monthly increase. However, the latter accounted for a larger share of national transactions.

The Greater Toronto Area (GTA), 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. Meanwhile, other major urban markets elsewhere in Canada are well balanced or have ample supply,’ said CREA president Pauline Aunger.

Actual, not seasonally adjusted, sales activity rose 18.7% year on year in February, some 12.7% above the 10 year average for the month. Activity increased above year ago levels in about three quarters of all local markets. BC’s Lower Mainland, the GTA and Montreal contributed most to the year on year increase in national activity.

Gregory Klump, CREA chief economist pointed out 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 $500,000 and below a million dollars. The tighter regulations combined with a short supply of single family homes will restrain transactions below one million dollars,’ he explained.

‘If recent trends continue, home sales above one million dollars will account for a greater share of activity and will further fuel year on 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,’ Klump added.

The number of newly listed homes edged up 0.5% in February 2016 compared to January. The rise in new listings in the Lower Mainland of British Columbia, York and Mississauga Regions of the GTA and Hamilton-Burlington helped to push the national figure higher. Monthly increases in new listings in these housing markets were offset by monthly declines in Central Toronto, Calgary and Montreal.

The national sales to new listings ratio rose to 59.5% in February 2016 versus 59.3% the previous month. This marks the ratio’s highest reading since November 2009. A sales to new listings ratio between 40% and 60% is generally consistent with balanced housing market conditions, with readings below and above this range indicating buyers’ and sellers’ markets respectively.

The ratio was within this range in about 45% of all local housing markets in January. A little over one third of all local housing markets recorded a ratio above 60%, as in recent months, virtually all these housing markets are located in British Columbia and Ontario.

The number of months of inventory is another important measure of the balance between housing supply and demand. It represents the number of months it would take to completely liquidate current inventories at the current rate of sales activity.

There were 5.2 months of inventory on a national basis at the end of February 2016, the lowest level in nearly six years. The national figure is being pulled lower by increasingly tighter housing markets in B.C. and Ontario. The number of months of inventory is currently sitting at or below two months in the Lower Mainland of British Columbia, the GTA, St. Catharines, Brantford, Oakville-Milton and Guelph.

Year on year price growth accelerated among all property types tracked by the index. A breakdown shows that two storey single family homes again posted the biggest annual price rise of 10.54%, followed by townhouse/row units up 7.41%, one storey single family homes up 7.38% and apartments up 6.34%.

Price growth continued to vary widely among housing markets tracked by the index.
Greater Vancouver with growth of 22.18% and the Fraser Valley up 19.39% recorded the largest gains, followed by Greater Toronto up 11.3%.

Meanwhile, year on year price growth in Victoria accelerated to almost 10% while Vancouver Island home price growth picked up slightly to 5.7%. By contrast, home prices retreated 3.5% Calgary and by 3% in Saskatoon. Year on year price growth climbed out of negative territory in Regina for the first time in close to three years in February.

Additionally, home prices edged higher on a year on year basis in Ottawa by 0.82% and rose modestly in Greater Montreal by 1.67% while price growth also strengthened further in Greater Moncton by 6.97%.

The MLS Home Price Index is regarded as a better gauge of price trends than is possible using averages because it is not affected by changes in the mix of sales activity the way that average price is.

The actual, not seasonally adjusted, national average price for homes sold in February 2016 was $503,057, up 16.4% year on year and this continues to be pulled upward by sales activity in Greater Vancouver and Greater Toronto, which are Canada’s most active and expensive housing markets. If these two housing markets are excluded from calculations, the average is a more modest $355,235 and the year on year gain is reduced to 8.7%.

Even then, the gain reflects a tug of war between strong average price gains in housing markets around the GTA and the Lower Mainland of British Columbia versus flat or declining average prices elsewhere in Canada. If British Columbia and Ontario are excluded from calculations, the average price slips even lower to $291,510, representing a decline of 1.4% year on year.

Home Sales in Canada Up 0.8% in First weeks of 2016 by Property Wire

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