CREA News

OTTAWA (September 30, 2010) – The Board of Directors of the Canadian Real Estate Association (CREA) today entered into a consent agreement with the Commissioner of Competition regarding the application before the Competition Tribunal, subject to ratification by the CREA membership at its Special General Meeting in St. John’s on October 24, 2010.

The agreement will be held in escrow pending ratification by CREA members.

“CREA has always been committed to ongoing dialogue with the Competition Bureau.  This agreement is the result of extensive negotiations between CREA and the Competition Bureau,” says CREA President Georges Pahud. “Both sides gained a better understanding of their respective concerns through our discussions.  We are pleased that a resolution has been reached, subject to member approval.”

CREA has always been of the view that its rules regarding member board MLS^® systems do not in any way prevent or restrict a broad range of business models. In CREA’s view, the consent agreement reflects this reality and would avoid unnecessary and expensive litigation proceedings.

The Special General Meeting is a yearly event held every fall for members of the Canadian Real Estate Association.

CREA will make no further public comment in advance of its upcoming Special General Meeting.

OTTAWA – September 15th, 2010 – National resale housing activity improved in August 2010, according to statistics released by The Canadian Real Estate Association (CREA).

Seasonally adjusted national home sales activity via the Multiple Listing Service® (MLS®) Systems of Canadian real estate Boards in August rose 4.1 per cent from the previous month. This marks the first monthly increase since March 2010.

Activity was up most in Ontario and British Columbia, with monthly gains in these two provinces accounting for most of the improvement in national sales activity in August. Seasonally adjusted sales activity either increased or remained stable in over half of all local markets across Canada.

Year-to-date transactions are up 2.2 per cent compared to the first eight months of last year. Activity rose sharply over the second half of 2009 and reached levels that are unlikely to be matched in the final four months of 2010, so year-to-date comparisons are forecast to turn down in the coming months.

The number of new residential listings on Canadian MLS® Systems also edged up 1.9 per cent on a seasonally adjusted basis in August compared to the previous month. Despite having edged slightly higher in all provinces except Alberta, new listings remain 16 per cent below the peak reached last April on a national basis. The average price of homes sold via Canadian MLS® Systems in August was $324,928, which is on par with the same month last year ($324,843). Average home prices eased slightly in Alberta and New Brunswick in August, but gains in every other province exceeded the national increase. Average price rose or was stable in nearly two-thirds of all local markets on a year-over-year basis, but increases are shrinking in Canada’s most active and priciest markets.

The national weighted average price compensates for changes in provincial sales activity by taking into account provincial proportions of privately owned housing stock. It climbed 3.3 per cent on a year-over-year basis in August 2010. Similarly, the residential average price in Canada’s major markets was up 2.2 per cent year-over-year in August, while the weighted major market average price rose 6.6 per cent.

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 measures the balance between housing supply and demand. It stood at 6.9 months at the end of August 2010 on a national basis, which is down slightly from the seven months of inventory at the end of July 2010.

The seasonally adjusted number of months of inventory also stood at 6.9 months at the end of August on a national basis. This is down from 7.3 months at the end of July, and marks the first month-over-month decline since last November.

“Rising interest rates and a projected slowdown in job growth mean that the Canadian housing market is expected to continue to cool,” said Georges Pahud, CREA’s President. “This is overlooked in recent commentary that suggests further changes to mortgage regulations may be needed. A further tightening of regulations could negatively impact Canada’s softening housing market and consumer confidence.”

“High sales activity late last year and earlier this year borrowed from sales this summer and will continue do so over the coming months,” said Gregory Klump, CREA’s Chief Economist. “This makes the return to more normal levels of sales activity look like a steep downward trend.”

“The hangover from accelerated home purchases is likely to persist over the rest of the year. Although economic and job growth are expected to be tepid, they will continue to support housing markets,” he added.

Cites U.S. weakness as main risk to Canadian growth

The Bank of Canada raised its target for the overnight rate by one quarter of one percentage point to one per cent on September 8^th, 2010. It was the third consecutive quarter point hike. The Bank rate was raised to 1.25 per cent and the deposit rate is now 0.75 per cent.

The Bank noted that, while the global economic recovery is proceeding, it remains uneven. The main downside risk cited in the Bank’s announcement was the recent weakness in the U.S. recovery, saying, “In the United States, the recovery in private demand is being held back by high unemployment and recent indicators suggest a more muted recovery in the near term.”

Owing largely to the weaker profile for U.S. activity, the Bank now expects Canadian growth to be “slightly slower” than it had previously forecast in July. The Bank downplayed the small revision to the outlook, however, saying, “consumption growth is expected to remain solid and business investment to rise strongly. Both are being supported by accommodative credit conditions, which have eased in recent weeks mainly owing to sharp declines in global bond yields.”

While the outlook for the Canadian economic recovery has changed slightly, inflation in Canada has remained in line with the Bank’s expectations. The Bank noted that, while the monetary policy measures undertaken since April have had the effect of modestly tightening financial conditions in Canada, they nevertheless remain “exceptionally stimulative.”

As of September 8^th, the advertised five-year conventional mortgage rate stood at 5.39 per cent. This is down 0.1 per cent from a year earlier, and stands 0.4 per cent below where it was when the Bank made its previous interest rate announcement on July 20, 2010. It is also 0.1 percentage points below where it stood at the beginning of the year.

The statement ended with the message, “Any further reduction in monetary policy stimulus would need to be carefully considered in light of the unusual uncertainty surrounding the outlook.” The Bank had previously characterized the uncertainty in the outlook as “considerable.”

Most analysts now expect the Bank to hold off on any further rate hikes this year while it gauges the effects of recent tightening on the domestic economy, and watches the very uncertain situation south of the border. However, the overall tone of the Bank’s statement was more hawkish than expected, and this has led some economists to suggest this may not be the last hike of the year. Much will depend on economic data out over the next month and a half in advance of the Bank’s next decision on October 19^th.

The Bank’s next Monetary Policy Report will be published on October 20^th. The Bank will make its next scheduled rate announcement on October 19^th.

http://creastats.crea.ca/natl/interest_rate_trends.htm

(CREA 09/09/2010)