Monthly Archives:: December 2014

Ottawa, ON, December 15, 2014 - According to statistics released today by The Canadian Real Estate Association (CREA), national home sales activity was unchanged on a month-over-month basis in November 2014.

Highlights:

• National home sales were unchanged from October to November.
• Actual (not seasonally adjusted) activity stood 2.7% above November 2013 levels.
• The number of newly listed homes edged down 0.4% from October to November.
• The Canadian housing market remains balanced.
• The MLS® Home Price Index (HPI) rose 5.2% year-over-year in November.
• The national average sale price rose 5.7% on a year-over-year basis in November.

The number of home sales processed through the MLS® Systems of Canadian real estate

Boards and Associations was unchanged in November 2014 compared to October. As a result, activity remains much improved compared to the quiet start to the year.

November sales strengthened in half of all local housing markets, with monthly increases in Montreal, Edmonton, Winnipeg, Hamilton-Burlington, Barrie, and Windsor-Essex tempered by a monthly decline in the Greater Toronto Area.

“The Canadian housing market remains a story about how sales and prices are still running strong in some areas while others are seeing subdued levels of activity with slower price gains or modest price declines,” said CREA President Beth Crosbie. “All real estate is local and your REALTOR® remains your best source for information about how the housing market is shaping up where you currently live or might like to in the future.”

“The effect of lower oil prices on Canada’s housing markets is something of a wildcard at the moment,” said Gregory Klump, CREA’s Chief Economist. “It’s not clear how far oil prices may drop or for how long they’ll stay down. How that plays out may affect the outlook for interest rates, job growth, consumer confidence, and sentiment about making major purchases.”

Actual (not seasonally adjusted) activity in November stood 2.7 per cent above levels reported in the same month last year. November sales were up from year-ago levels in about half all local markets, led by Greater Vancouver and the Fraser Valley, Calgary, and Greater Toronto.

Actual (not seasonally adjusted) sales activity for the year-to-date in November was five per cent above levels in the first 11 months of 2013. It was also slightly above (+2.4 per cent) the 10-year average for year-to-date sales.

The number of newly listed homes edged down 0.4 per cent in November compared to October. Led by Greater Toronto, new supply was down in just over half of all local markets.

The national sales-to-new listings ratio was 56 per cent in November. While this is marginally tighter compared to the previous three months in which it averaged 55.7 per cent, the broader trend for the ratio indicates that it has remained balanced and largely stable for the past four months.

A sales-to-new listings ratio between 40 and 60 per cent is usually consistent with a balanced housing market, with readings above and below this range indicating sellers’ and buyers’ markets respectively.

The ratio was within this range in almost 60 per cent of all local markets in November. About 60 per cent of the remaining markets posted ratios above this range, almost all of which are located in British Columbia, Alberta and Southern 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 5.8 months of inventory nationally at the end of November 2014. As with the sales-to-new listings ratio, the number of months of inventory has been stable for the past four months and remains well within balanced market territory.

The Aggregate Composite MLS® HPI rose by 5.19 per cent on a year-over-year basis in November. Price gains have held steady between five and five-and-a-half per cent since the beginning of the year.

Year-over-year price growth decelerated among all property types tracked by the index in November compared to October.

Two-storey single family homes continue to post the biggest year-over-year price gains (+6.79 per cent), followed closely by townhouse/row units (+5.63 per cent). Price growth was comparatively more modest for one-storey single family homes (+4.20 per cent) and apartment units (+3.18 per cent).

Price growth varied among housing markets tracked by the index. As in recent months,

Calgary (+8.53 per cent), Greater Toronto (+7.73 per cent), and Greater Vancouver

(+5.69 per cent) continue to post the biggest year-over-year increases. By contrast, prices in Regina declined by 3.36 per cent.

In other markets from West to East, prices were up between 1.6 and 2.8 per cent on a year-over-year basis in the Fraser Valley, Victoria, and Vancouver Island, by less than one per cent in Saskatoon and Ottawa, flat in Greater Montreal, and down by less than one per cent in Greater Moncton (Table 1).

The MLS® Home Price Index (MLS® HPI) provides 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 November 2014 was $413,649, up 5.7 per cent from the same month last year.

The national average home price continues to be raised considerably by sales activity in Greater Vancouver and Greater Toronto, which are among Canada’s most active and expensive housing markets. Excluding these two markets from the calculation, the average price is a relatively more modest $331,743 and the year-over-year increase shrinks to five per cent.

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PLEASE NOTE: The information contained in this news release combines both major market and national sales information from MLS® Systems from the previous month.

CREA cautions that average price information can be useful in establishing trends over time, but does not indicate actual prices in centres comprised of widely divergent neighbourhoods or account for price differential between geographic areas. Statistical information contained in this report includes all housing types.

MLS® Systems are co-operative marketing systems used only by Canada’s real estate Boards to ensure maximum exposure of properties listed for sale.

The Canadian Real Estate Association (CREA) is one of Canada’s largest single-industry trade associations, representing more than 109,000 REALTORS® working through some 90 real estate Boards and Associations.

Further information can be found at http://crea.ca/statistics.

The Bank of Canada announced on December 3^rd, 2014 that it was holding its trend-setting overnight lending rate at 1 per cent.

Economic conditions around the world have changed rapidly in recent months. The Bank’s December 3^rd announcement took a decidedly “on the one hand, on the other hand” approach in addressing how recent developments have altered not only the outlook for inflation and the economy, but also the risks to that outlook.

While it considers the potential upside and downside risks to be balanced, the Bank sees them as having intensified.

1. Risks to the Canadian economy: On the upside, the Bank acknowledged Canadian exports as having improved, resulting in stronger business investment and employment, suggesting the return of balanced and self-sustaining growth. On the downside, the Bank indicated lower prices for oil and other commodities will act as a drag on the Canadian economy, and that household imbalances present a significant risk to financial stability.
2. Inflation risks: On the downside: weaker oil prices could lower inflation. On the upside, The impact of lower oil price may be tempered by a stronger U.S. economy, Canadian dollar depreciation, and recent federal fiscal measures. The Bank acknowledged inflation is up by more than expected due largely to what it considers to be temporary factors, and while underlying inflation has edged up it remains below the 2 per cent target.
3. Interest rate risks: On the upside, developments as outlined above together with upward revisions to past economic data suggest that slackness in the Canadian economy may be less than the Bank previously thought. That means the expected date for the first interest rate hike could be moved up. On the downside, conditions in the labour market continue to suggest there is still plenty of slackness in the Canadian economy. Additionally, lower oil prices could mean slower growth and more time before the Bank starts raising interest rates.

What does all this mean for the interest rate outlook? At this point, not much. The first hike is still pencilled in for later next year. Whether that outlook changes will depend on what happens in the months ahead – and perhaps most importantly, what happens to the price of oil.

As of December 3rd, 2014, the advertised five-year lending rate stood at 4.79 per cent, unchanged from the previous Bank rate announcement on October 22nd, 2014 and down 0.55 percentage points from the same time one year ago.

The next interest rate announcement along with the next update to the Monetary Policy Report will be on January 21^st, 2015.

(CREA 12/03/2014)