According to statistics released today by The Canadian Real Estate Association
(CREA), national home sales were down slightly in January 2017 on a month-over-month basis.
The MLS® Home Price Index (HPI) in January was up 15 per cent year-over-year, which was up slightly from December's gain, reflecting an acceleration in apartment and townhouse/row unit price increases. The national average sale price pretty much stayed the same year-over-year in January. The actual (not seasonally adjusted) national average price for homes sold in January 2017 was $470,253, almost unchanged from where it stood one year earlier. 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, 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 $120,000 to $351,998 if Greater Vancouver and Greater Toronto sales are excluded from calculations.
Home sales over Canadian MLS® Systems edged down by 1.3 per cent month-over-month in January 2017, putting them at the second lowest monthly level since the fall of 2015 and only slightly above levels recorded last November when recently tightened mortgage regulations came into effect. Sales activity was down from the previous month in about half of all local markets, led by three of Canada's largest urban centres: the Greater Toronto Area (GTA), Greater Vancouver and Montreal.
The British Columbia Real Estate Association says the province's housing market has tumbled from record highs posted in 2016 to return to what it calls historic, long-term averages. The association says 4,487 condos, townhomes and detached homes sold in B.C. in January, down 23 per cent compared with the same period last year, and the total sales value also dropped 36.5 per cent over the same period to $2.79 billion, while the average home price was off 17.5 per cent to $621,093.
Figures from the real estate association show the change was most pronounced in Vancouver where fewer detached homes sold and sales of all property types made up just 35 per cent of sales across B.C., an eight per cent decrease from January 2016.
With fewer expensive, single-family homes changing hands compared with condos or townhomes, the association's news release says the average price of a property in the Vancouver area skewed downward.
It says the residential benchmark price in Greater Vancouver declined 3.7 per cent over the last six months, but record hikes last year mean prices are still 15.6 per cent higher than they were in January 2016.
"A marked decrease in the average residential price (across B.C.) is largely the result of relatively more home sales occurring outside of the Lower Mainland,"' association chief economist Cameron Muir says in the release.
He said Victoria's sales showed above average performance in January, but overall, the market is returning to long-term average levels.
Actual (not seasonally adjusted) sales activity was up 1.9 per cent compared to the same month last year. While sales were up from year-ago levels in about two-thirds of all local housing markets including in the GTA, Calgary, Edmonton, London and St Thomas, and Montreal, they were down significantly in the Lower Mainland of British Columbia.
"The shortage of homes available for sale has become more severe in some cities, particularly in and around Toronto and in parts of BC," said Gregory Klump, CREA's chief economist. "Unless sales activity drops dramatically, the outlook for home prices remains strong in places that face a continuing supply shortage."
The number of newly listed homes dropped 6.7 per cent from December 2016 to January 2017, the second consecutive monthly decline. New listings were down in about two-thirds of all local markets, led by the GTA and environs across Vancouver Island.
With the monthly decline in new listings surpassing the decline in sales, the national sales-to-new listings ratio jumped to 67.7 per cent in January compared to 64 per cent in December and 60.2 per cent in November. 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 per cent in about half of all local housing markets in January, the vast majority of which are located in British Columbia, in and around the GTA, and across southwestern Ontario. The monthly decline in newly listed homes further tightened housing markets that were already in sellers' market territory.
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). The number of months of inventory in January 2017 stood at or below one month in the GTA, Hamilton-Burlington, Oakville-Milton, Kitchener Waterloo, Cambridge, Brantford and Guelph. The MLS® HPI now includes Oakville-Milton and Guelph, and has been historically revised to ensure that all aggregate measures remain comparable.
“The Toronto housing market —- and the many cities surrounding it —- are in a housing bubble,” Bank of Montreal chief economist Doug Porter said in a note to investors, where he added that he believes the main culprit is demand not supply. “Toronto and any city that is remotely within commuting distance are overheating, and perhaps dangerously so.”
Prices for two-storey single family homes posted the strongest year-over-year gains (16.8 per cent), followed closely by townhouse/row units (15.8 per cent), one-storey single family homes (14.4 per cent) and apartment units (13.3 per cent). While benchmark home prices were up from year-ago levels in 10 of 13 housing markets tracked by the MLS® HPI, price trends continued to vary widely by location.
In the Fraser Valley and Greater Vancouver, prices have receded from their peaks posted in August 2016. That said, home prices in these regions nonetheless remain well above the levels from a year ago, being up 24.9 per cent and 15.6 per cent respectively. Meanwhile, benchmark prices continue to climb in Victoria and elsewhere on Vancouver Island together with Greater Toronto, Oakville-Milton and Guelph. Year-over-year price gains in these five markets ranged from about 18 per cent to 26 per cent in January. By comparison, home prices were down 2.9 per cent year-over-year in Calgary and by 1 per cent year-over-year in Saskatoon. Prices in these two markets now stand 5.9 per cent and 4.3 per cent below their respective peaks reached in 2015. Home prices were up modestly from year-ago levels in Regina (3.8 per cent), Ottawa (3.7 per cent) and Greater Montreal (3.1 per cent). In Greater Moncton, home prices for the market overall held steady (-0.2 per cent), reflecting an increase in townhouse row units prices (5.8 per cent) that was offset by a decline in prices for one-storey single family homes (-1.0 per cent).
"Canadian homebuyers face some challenges this year, including new mortgage rules that make it harder to qualify for a mortgage and regulatory changes that will push up mortgage financing costs," said CREA president Cliff Iverson. "It will take some time to gauge the extent to which these challenges will weigh on home buyers in different housing markets across Canada. 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."
The MLS® Home Price Index (MLS® HPI) provides the best way of gauging price trends because average price trends are prone to being strongly distorted by changes in the mix of sales activity from one month to the next.
The Canadian Real Estate Association (CREA) is one of Canada's largest single-industry trade associations, representing more than 120,000 REALTORS® working through some 90 real estate Boards and Associations.
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