Led by Vancouver and Toronto, seasonally adjusted sales activity posted monthly gains in more than half of all local Canadian markets in January. National sales activity has improved steadily since last summer, and now stands almost 25% above the low point reached in July 2010.
‘We anticipated the recent announcement of tighter mortgage regulations, which will come into effect this March, would pull forward sales activity into the first quarter of 2011, particularly in some of Canada’s more expensive housing markets. The sharp rise in sales activity in Toronto following the announcement provides early evidence confirming this,’ said Gregory Klump, CREA’s chief economist.
But it will take some time before the longer term impact of the latest mortgage regulations on the housing market can be known, according to Georges Pahud, CREA’s President. ‘For that reason, further action shouldn’t be taken until the impact can be measured. In the meantime, if last year can be used as any guide, sales activity may heat up further as we get closer to the date on which tighter mortgage regulations come into effect, especially in some of Canada’s pricier markets,’ he explained.
Actual, not seasonally adjusted, national sales activity via the Multiple Listing Service systems of Canadian real estate Boards came in 6.6% below levels in January 2010. This was the smallest year on year decline since May 2010. While actual new listings posted their biggest month on month increase in January.
January 2011 was no exception, marking the first time since 2007 that new listings more than doubled in January compared to the previous month. As a result, seasonally adjusted new listings rose 3.9% from December levels, the largest monthly gain since March 2010.
Sales activity has been on the rise and prices have been stable since last autumn, so CREA had been expecting potential sellers who shied away from the market last summer to begin listing their properties in early 2011.
Because sales activity and new supply rose in tandem in January, the national resale housing market remained balanced. The national sales to new listings ratio, a measure of market balance, stood at 55.7% in January 2011, which is little changed from the previous two months. Just over half of local markets in Canada were in balanced market territory in January.
The number of months of inventory represents the number of months it would take to sell current inventories at the current rate of sales activity, and is another measure of the balance between housing supply and demand. The seasonally adjusted number of months of inventory stood at 5.5 months at the end of January on a national basis. This is the lowest level since last March.
About two thirds of local markets recorded year on year gains in average price in January 2011. The national average price for homes sold in January 2011 was $343,675. While this is little changed compared to the previous three months, it represents an increase of 4.5% compared to January 2010.
Much of the year on year gain in January 2011 resulted from a jump in the number of multi million dollar home sales in a couple of areas in Greater Vancouver, the effects of which were amplified at the local, provincial, and national levels by the fact that actual monthly volumes for sales activity are low in January compared to other months.
