Sales and prices up in Canada, latest index data shows

Nationally home sales in Canada increased by 5.2% month on month in February but actual, not seasonally adjusted, activity was down 2.6% from a year earlier, the latest index data shows.

Average prices were up 3.5% from January’s gain reflecting an acceleration in home price increases, particularly for single family homes in and around Toronto, according to the figures from the Canadian Real Estate Association (CREA).

Year on year sales were up 16% and increased in about 70% of all local markets, although the national increase was overwhelmingly driven by an increase in activity across the Greater Toronto Area (GTA).

The fall in actual activity was due to a moderation in sales in the Lower Mainland of British Columbia compared to extraordinarily elevated levels recorded a year ago.

‘Housing market trends continue to differ by region. Homes are selling briskly throughout the Greater Toronto Area and nearby communities. Elsewhere, competition among potential buyers is less intense, so listings take longer to sell,’ said CREA President Cliff Iverson..

Gregory Klump, CREA chief economist, pointed out that in and around Toronto many potential move-up buyers find themselves outbid in multiple offer situations amid a short supply of listings.

‘As a result, they aren’t putting their current home on the market. It’s something of a vicious circle from the standpoint of a supply shortage and a challenge for first time and move-up home buyers alike’ he said.

‘By contrast, housing markets in urban markets elsewhere in Canada are either balanced or are amply supplied. Because housing market conditions vary by region, further tightening of mortgage regulations aimed at cooling the housing market in one region may destabilize it elsewhere,’ he added.

A breakdown of the figures show that prices for two storey single family homes posted the strongest year on year gains with growth of 17.9%, followed closely by townhouse/row units up 16%, one storey single family homes up 15% and apartments up 13.7%.

While benchmark home prices were up from year ago levels in 11 of 13 housing markets tracked by the index, they do vary widely by location. In the Fraser Valley and Greater Vancouver, prices are slightly off their peaks posted in August 2016. That said, home prices in these regions nonetheless remain well above year ago levels with growth of 21.4% and 14% respectively.

Meanwhile, benchmark prices continue to climb in Victoria and elsewhere on Vancouver Island, as well as in Greater Toronto, Oakville-Milton and Guelph with rises ranging from about 18% to 30% in February.

By comparison, home prices were down by 1.9% year on year in Calgary and by 1.2% in Saskatoon. Prices in these two markets now stand 5.6% and 5.1% below their respective peaks reached in 2015.

Home prices were up modestly from year-ago levels in Regina with growth of 3.5%, up by 3.8% in Ottawa, 3.3% in Greater Montreal and 1.2% in Greater Moncton.

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.

That said, the index report points out that Greater Vancouver’s share of national sales activity has diminished considerably over the past year, giving it less upward influence on the national average price. The average price is reduced by almost $150,000 to $369,728 if Greater Vancouver and Greater Toronto sales are excluded from calculations.

The data also shows that the number of newly listed homes rose 4.8% in February 2017, led by the GTA and nearby markets following a sharp drop in January. More than a third of all local housing markets saw new listings recede from levels the previous month, including those in the Prairies, northern Ontario and the Atlantic region.

Meanwhile, new listings in the Greater Vancouver region fell significantly from January levels, having retreated by nearly 25% to reach the lowest level since 2001.

With similar monthly increases in both sales and new listings, the national sales to new listings ratio was 69% in February, little changed from 68.7% in January. 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 above 60% in almost 60% of all local housing markets in February, the majority of which are located in British Columbia, in and around the GTA and across southwestern Ontario.

The number of months of inventory is another important measure of the balance between housing supply and demand. It represents how long it would take to completely liquidate current inventories at the current rate of sales activity. There were 4.2 months of inventory on a national basis at the end of February 2017, down from 4.5 months in January and the lowest level for this measure in almost a decade.

The imbalance between limited housing supply and robust demand in Ontario’s Greater Golden Horseshoe region is without precedent, the region includes the GTA, Hamilton-Burlington, Oakville-Milton, Guelph, Kitchener-Waterloo, Cambridge, Brantford, the Niagara Region, Barrie and nearby cottage country.

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