CREA News

MLS® home sales activity increased for the third time in as many months in April 2009, according to statistics released by The Canadian Real Estate Association (CREA). The national average price also rose in April, to within short reach of the record levels reached one year ago.

Seasonally adjusted national home sales activity climbed 11.2 per cent in April 2009 compared to the previous month. This is the largest month-to-month increase in activity in more than five years. MLS® home sales activity reached its highest level in seven months, with 34,838 units trading hands nationally via the MLS® in April on a seasonally adjusted basis.

The increase in April builds on gains of 10.3 per cent in February and 7.7 per cent in March. Seasonally adjusted activity now stands 32 per cent above the lowest level in a decade that was recorded in January 2009.

Seasonally adjusted sales were up from March levels in 70 per cent of local markets, with gains in Toronto (10 per cent), Vancouver (30 per cent), Montreal (15 per cent), and Calgary (31 per cent) contributing most to the overall increase in monthly activity.

Actual (not seasonally adjusted) MLS® home sales totaled 43,473 units in April 2009, down 11.8 per cent from the same month one year ago. Year-over-year declines have been shrinking since dropping a record 42.2 per cent in November 2008.

“REALTORS® know that several factors have led to this market situation,” says Regina Broker Dale Ripplinger, President of The Canadian Real Estate Association. “First, price adjustments in some markets have helped affordability. Second, lenders do have money for people and properties that qualify, although some are being more stringent. The third factor involves consumer confidence, which has risen in the housing market through the Spring.”

The last factor, CREA’s President adds, is that sellers have realized that realistic pricing is key, and that is very much driven by local factors. “Homes are only worth what a buyer is willing to pay.”

The national MLS® residential average sale price in April ($306,366) stands 3.2 per cent below April 2008, when it reached its pre-recession peak. The MLS® residential average price broke all previous monthly records in Saskatchewan, Manitoba, Quebec, and Nova Scotia.

The supply of homes coming onto the MLS® market continued trending downward in April. Seasonally adjusted MLS® residential new listings edged lower by 1.8 per cent from the previous month to 66,843 units, the lowest level since June 2006. Seasonally adjusted new residential listings in April were 16.4 per cent below the peak reached in May 2008.

With sales activity rising strongly and new listings trending downward, the balance between supply and demand is firming up in British Columbia, Alberta, Ontario, and Quebec. As a result, in April 2009 national sales as a percentage of new listings reached the highest point since February 2008.

The residential dollar volume for MLS® sales climbed 12.3 per cent from the previous month to reach $10.2 billion. This is the biggest increase since December 2001, and first time since September 2008 that dollar volume surpassed $10 billion.

“If the trend for MLS® sales activity over the past few months persists, the number of transactions in May could surpass the pre-recession levels of September 2008,” said CREA Chief Economist Gregory Klump. “In the recessions of the early 1980s and 1990s, sales activity bottomed out before the job market or even the economy did. Improved affordability may result in Canadian existing home sales leading the economic recovery this year.”

The full news release is available in PDF format here. (CREA 14/05/09)

A Spring housing market that was more active than anticipated has prompted a change to the MLS® home sales forecast issued by The Canadian Real Estate Association for the rest of 2009, and for 2010.

National home sales activity is forecast to be down 14.7 per cent to 370,500 units in 2009. This is slightly less than the reduction in activity predicted in CREA’s forecast issued last February. The forecast decline in annual activity was trimmed to reflect a stronger than expected rebound in activity in British Columbia and Ontario in the first quarter of 2009. Forecast declines in annual activity were reduced for these provinces. They were also shaved for Manitoba, Quebec, New Brunswick, and Prince Edward Island to reflect stabilizing trends in sales activity in these provinces.

National MLS® home sales activity is forecast to rebound by 7.2 per cent to 397,000 units in 2010. This is a slightly weaker rebound than predicted in CREA’s previous forecast. The revision reflects recently downgraded forecasts for economic growth next year. The rebound in activity in 2010 is forecast to be biggest in British Columbia and Alberta.

New listings on MLS® systems in British Columbia, Alberta and Ontario are forecast to continue easing following the peak reached last year. New listings are also expected to shrink in Saskatchewan, Quebec, New Brunswick, and Nova Scotia. Fewer new listings will further stabilize the resale housing market as sales activity draws down inventories.

The national MLS® average home price is forecast to decrease 5.2 per cent in 2009, led by average price declines in British Columbia and Alberta. By contrast, the average home price is forecast to rise in Manitoba (4.3 per cent), Price Edward Island (4.2 per cent) and Newfoundland & Labrador (10.9 per cent). CREA’s previous forecast predicted a decline in the national average price of eight per cent in 2009.

The price trend is similar but less dramatic for the weighted national MLS® average price, which compensates for changes in provincial sales activity by taking into account provincial proportions of privately owned housing stock. The weighted national MLS® average price is forecast to decline 3.6 per cent in 2009, and hold steady in 2010. CREA’s previous forecast predicted the weighted national average price for MLS® homes sales would decline by 6.4 per cent.

“Monthly resale housing activity improved as the first quarter progressed, entering the second quarter on a rising trend and closing in on levels last seen before it fell sharply late last year,” said CREA Chief Economist Gregory Klump. “It will take time for housing inventories to be drawn down enough to put new home construction on a stronger footing, but the balance between resale housing supply and demand is improving in a number of major markets. The national average price has begun to rebound from the recent low reached in January, and is forecast to begin rising modestly above year-ago levels in the fourth quarter of 2009.”

The full news release is available in PDF format here. (CREA 14/05/09)

Average home sale yields $46,400 in additional consumer spending

OTTAWA – April  27^th, 2009 – The resale housing industry in Canada generated more than 202,000 jobs and an average of $22.3 billion annually in various economic spinoffs in the period from 2006 and 2008, according to a study prepared for The Canadian Real Estate Association by Altus Clayton.

The report says each residential MLS® transaction generated an average of $46,400 in additional consumer spending in the period from 2006 to 2008. This included the purchase of furniture and appliances, moving costs, renovations, services, and taxes. By comparison, from 2004 to 2006 the average transaction yielded $32,200 in additional consumer spending. In the period from 2002 to 2004, it was $24,697.

The new study says the economic impact of each MLS® sale varies by province or region, from a high of $60,200 in British Columbia to $28,925 in Atlantic Canada. The report notes the spending relates to the cost of moving from one home to another and for renovations after moving in – it does not include any renovation expenditures by sellers to prepare properties for sale.

“Real estate continues to be one of the major engines driving Canada’s economy,” said CREA President Dale Ripplinger. “This study shows the tremendous contributions Canada’s resale housing industry makes to the economy. When Canadians move, they typically buy new appliances or furnishings, and renovate in various ways to tailor their home to their specific requirements.”

“Purchases and sales of homes trigger additional expenditures that have broad economic impacts,” said CREA Chief Economist Gregory Klump. “Job creation is also a major factor of the sale of a home. The study shows that an average of 202,750 jobs were created in Canada each year covered by the study as a direct result of resale housing transactions.”

The economic impact of the market for existing homes is also reflected in the sales processed by MLS® systems in Canada. The 2008 national MLS® report from The Canadian Real Estate Association says there were 462,734 residential properties sold through the Multiple Listing Service® last year.

The complete updated Clayton Research report is available in PDF format at www.crea.ca or by sending an email to info@crea.ca.

The Canadian Real Estate Association  (CREA) is one of Canada’s largest single-industry trade associations, representing more than 96,000 REALTORS® working through more than 100 real estate Boards and Associations. CREA supports growth that encourages economic vitality, provides housing opportunities, respects the environment and builds good communities and safe neighbourhoods. CREA represents its members at the federal level, and defends the public right to own and enjoy property. The Association also owns the Multiple Listing Service® (MLS®) trademark, and is co-owner in Canada of the REALTOR® trademark.

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 A PDF version of this news release is available here.

For additional information, please contact:

Gregory Klump,

CREA Chief Economist

Phone: (613) 237-7111 or 613-219-7896 

Email: gklump@crea.ca

Bob Linney

CREA Communications Director

Cell: 613-301-2219

Email: rlinney@crea.ca

The Bank of Canada lowered its benchmark overnight lending rate by one quarter of a percentage point to 0.25 per cent at its setting on April 21st, 2009. The trend-setting Bank rate, which is set 0.25 percentage points above the overnight lending rate, declined to 0.5 per cent.

The Bank acknowledged the global economic recession had intensified since publishing its previous economic forecast in January. “In an environment of continued high uncertainty, the global recession has intensified and become more synchronous since the Bank’s January Monetary Policy Report Update, with weaker-than-expected activity in all major economies,” said the Bank when it again lowered interest rates on April 21st.

The Bank has repeatedly lowered its policy interest rate to support economic growth. Since December 2007, the Bank has cut its overnight lending rate by a total of 4.25 per cent. Major Canadian chartered banks lowered their prime lending rate in lockstep with the Bank of Canada’s most recent interest rate cuts.

In its announcement, the Bank indicated that it was done cutting rates now that its benchmark overnight lending rate has been dropped to what it described as “the effective lower bound for that rate.” In a departure from the status quo, it did not lower the deposit rate, which is the rate of interest paid on deposits held by financial institutions at the Bank of Canada. Leaving the deposit rate unchanged at 1/4 per cent further adds much needed liquidity into the financial system.

“The Bank was unusually explicit in its language about holding its key interest rate at its rock bottom, now that it further downgraded its inflation outlook,” said CREA Chief Economist Gregory Klump. “By saying ‘the target overnight rate can be expected to remain at its current level until the end of the second quarter of 2010 in order to achieve the inflation target,’ the Bank has removed any guesswork for projections as to how long it will be before interest rates can be expected to begin rising.”

The Bank downwardly revised its forecast for economic growth in 2009 and 2010, and extended its forecast as to how long Canada would remain mired in an economic recession.

It also pushed the goalposts out to the third quarter of 2011 as to when it expects inflation to climb back to the two per cent midpoint of its target range between one and three per cent.

“For the second time this year, the Bank revised its economic growth forecast downward, making it more downbeat than the most bearish of private sector economic forecasts,” said Klump. “The Bank economic growth forecast for 2010 was also cut, but it remains rosier than the current consensus.”

The Bank’s Monetary Policy Report published on April 23rd included information about additional monetary policy tools it may use to further inject liquidity into the financial system in its ongoing attack against the continuing credit crunch. The circumstances under which it would these tools were not described. It instead focused how measures already taken to boost financial market liquidity would be given ample time to loosen up the credit crunch.

When the Bank cut interest rates on April 21st, the advertised five-year conventional mortgage rate stood at 5.45 per cent. This is down 1.54 per cent from one year earlier, and 0.34 per cent below where it stood when the Bank made its previous interest rate announcement on March 3rd.

The ongoing credit crunch has led mortgage lenders to reduce discounts on advertised mortgage interest rates, and in some cases these have been completely eliminated.

“Resale housing activity began stabilizing in the first quarter of 2009, thanks to improving affordability,” said Klump. “Lower prices and an extended stretch of low interest rates will further support sales activity this year and next. In the economic recessions of the early 1980s and 1990s, resale housing activity bottomed out before the overall economy did. As then, homebuyers this year will continue being drawn to market by improving affordability.” (CREA 21/04/2009)

Existing MLS® home sales activity increased for the second month in a row in March 2009, according to statistics released by The Canadian Real Estate Association (CREA). The number of new listings also continued trending lower in March, which firmed up the balance of supply to demand.

A seasonally adjusted total of 31,135 homes traded hands nationally via the Multiple Listing Service® (MLS®) in March 2009. This is an increase of seven per cent from the previous month, and builds on the 10.3 per cent activity gain in February. The number of transactions in March 2009 stands 18 per cent above levels reported in

January 2009, when activity sank to the lowest level in a decade.

The monthly increase in activity was largest in British Columbia (13.6 per cent), and Ontario (10.5 per cent). Sales were also up from February levels in Manitoba, Quebec, and Newfoundland & Labrador.

Actual (not seasonally adjusted) transactions numbered 35,225 units in March 2009. While this remains 13.7 per cent below levels reported in March 2008, it is the smallest year-over-year decline in six months.

The national average price for home sales via the MLS® remains below levels reached one year earlier, but year-over-year declines are shrinking. The MLS® average residential price for homes sold in March 2009 was $288,641, down 7.7 per cent from March 2008. This is the smallest year-over-year decline in six months.

The average price for homes sold via the MLS® set a new record in March 2009 in Manitoba, and remained above year-ago levels in Saskatchewan, Quebec, New Brunswick, Prince Edward Island, and Newfoundland & Labrador.

The national average price continues to be skewed downward by lower activity in some of Canada’s more expensive housing markets and by fewer transactions at the higher end of the price spectrum. British Columbia, Alberta and Ontario, where homes are more expensive, are significant contributors to the current downward trend in national average price. MLS® home sales activity in these provinces accounted for 69 per cent of national activity in March 2008, compared to 67 per cent in March 2009.

The price trend is less dramatic for the weighted national MLS® average price, which compensates for changes in provincial sales activity by taking into account provincial proportions of privately owned housing stock. The weighted national MLS® average sale price was down 4.7 per cent year-over-year in March, compared to a 5.1 per cent decline in February.

“Housing markets are starting to show signs of buyer interest because of lower prices and interest rates,” says Dale Ripplinger, President of The Canadian Real Estate Association. “We expect April sales activity will feel some effects from the federal government incentives announced in the last budget, including the increase in the maximum withdrawal allowed under the Home Buyers’ Plan, and the First Time Buyer Tax Credit.”

Q1 2009 Results
Seasonally MLS® adjusted MLS® sales activity in the first quarter of 2009 was little changed compared to the fourth quarter of 2008, declining by less than one-tenth of a per cent.

The number of homes for sale remains high, but continues trending downward. Seasonally adjusted national MLS® residential new listings numbered 208,755 units in the first quarter of 2009. This is down 6.4 per cent from the previous quarter, and represents the third consecutive quarter-over-quarter decline. On a seasonally adjusted basis, the number of MLS® residential new listings has dropped 11.9 per cent from the peak reached in the second quarter of 2008.

With sales activity increasing and new listings trending lower, the balance between supply and demand is firming up in British Columbia, Alberta, Ontario, and Quebec. These provinces have the largest influence on the national housing picture, so a firming housing market balance there in March 2009 caused the national housing market balance to tighten for the fourth time in as many months.

“A number of major housing markets are stabilizing, as buyers respond to improving affordability,” said CREA Chief Economist Gregory Klump. “Looking back to economic recessions in the early 1980s and 1990s, national resale housing activity bottomed out before the job market or economy did,” said Klump. “It will take time for ample supplies of new and existing homes to be drawn down, but demand appears to be stabilizing.”

PLEASE NOTE: The information contained in this news release combines both major market and national MLS® sales information from the previous month. The Canadian Real Estate Association has previously released these separately.

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 neighborhoods or account for price differential between geographic areas. Statistical information contained in this report includes all housing types.

MLS® is a co-operative marketing system 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 98,000 REALTORS® working through more than 100 real estate Boards and Associations. Further information can be found at www.crea.ca.

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A full PDF version of this news release is available here.
(CREA 15/04/09)