CREA News

OTTAWA – August 16, 2011 – According to statistics¹ released today by The Canadian Real Estate Association (CREA), national resale housing activity was stable on a month-to-month basis in July following an uptick in June.

Highlights:
• Sales activity was stable from June to July, but posted a big year-over-year gain due to weakened demand in July 2010.
• Year-to-date sales continue to run in line with the ten-year average.
• The number of newly listed homes inched up by less than one per cent from June to July.
• The national housing market remains firmly entrenched in balanced territory.
• The national average price posted the largest year-over-year gain since April 2010, but was below where it stood in June.
• Upward skewing of the national average price is diminishing due to fewer expensive sales and a declining share of national activity in Vancouver and Toronto.

National home sales activity held steady in July 2011 compared to the previous month, with just over half of local markets posting month-over-month gains.

Major markets that saw gains compared to June include Edmonton, Montreal, as well as Newfoundland and Labrador. Activity also held steady in Toronto, while Vancouver recorded a small decline.

“The continued stability in national sales activity shows that homebuyers remain confident about the soundness of investing in a home,” said Gary Morse, CREA’s President. “Mortgage interest rates are low and keeping home affordability within reach, making it an excellent time for buyers to take advantage of very favourable financing. Prices and affordability evolve differently among local markets, so buyers and sellers should consult their local REALTOR® to better understand how the outlook for housing supply, demand, and prices is shaping up in their housing market.”

Actual (not seasonally adjusted) sales activity came in 12.3 per cent above national levels reported one year earlier. This increase reflects weakened activity in July 2010, when levels for the month reached their lowest point since 2002.

A total of 284,537 homes have traded hands via Canadian MLS® Systems so far this year. This stands just 1.6 per cent below levels in the first seven months of last year, and continues to run in line with the ten-year average.

The number of newly listed homes edged up by less than one per cent from June to July. New listings were down in 60 per cent of local markets, but increased in many large urban centres including Toronto, Vancouver, Edmonton, and Ottawa.

The national housing market remains firmly planted in balanced territory. The national sales-to-new listings ratio, a measure of market balance, stood at 51.8 per cent in July, which is little changed from 52.3 per cent in June.

Based on a sales-to-new listings ratio of between 40 to 60 percent, about three in every five local markets in Canada were balanced in July. Half of the remaining markets may be classified as sellers’ markets, with a sales-to-new listings ratio of above 60 per cent.

The number of months of inventory stood at 6.1 months at the end of July on a national basis, which is little changed from the end of June (6.0 months). 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 actual (not seasonally adjusted) national average price for homes sold in July 2011 stood at $361,181, which is the lowest level since January. While up 9.3 per cent from its year-ago level, the increase reflects a short-lived decline in the average price following the introduction of the HST in B.C. and Ontario, and tighter mortgage regulations earlier in 2010.

“Earlier this year, the national average price was being skewed upward by sales in some expensive Vancouver neighbourhoods, but this factor is now diminishing,” said Gregory Klump, CREA’s Chief Economist. “Upward skewing of the national average price is also shrinking due to overall sales trends in Vancouver, and most recently in Toronto. Their market shares as a percentage of provincial and national sales activity are declining from the elevated levels seen in the first half of the year.”

“Changes in the national average home price are open to being misinterpreted,” added Klump. “They often signify changes in the mix of sales activity across and within local markets, rather than a rising or falling price trend for typical homes in a specific market.”

“The national share of sales activity in some of Canada’s more expensive urban centres may retreat further from elevated levels recorded earlier this year, resulting in an easing trend for the national average home price,” he added. “Even so, the stability of Canada’s housing market will likely continue to stand in stark contrast to further expected volatility in financial markets.” 

PLEASE NOTE: The information contained in this news release combines both major market and national MLS® sales information 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 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 100,000 REALTORS® working through more than 100 real estate Boards and Associations.

Further information can be found at http://www.crea.ca/public/news_stats/media.htm. 

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For more information, please contact:
Pierre Leduc, Media Relations
The Canadian Real Estate Association
Tel.: 613-237-7111 or 613-884-1460
E-mail: pleduc@crea.ca

¹ All figures in this release, unless otherwise noted, are seasonally adjusted to remove normal seasonal variation. Removing regular seasonal variations enables analysis of monthly changes and fundamental trends in the data.

OTTAWA – August 16, 2011 – The Canadian Real Estate Association (CREA) has revised its forecast for home sales activity via the Multiple Listing Service^® (MLS^®)  Systems of Canadian real estate Boards and Associations for 2011 and 2012.

Overall, sales activity and prices remained stronger than expected in the second quarter. Sales momentum was also better than expected heading into the third quarter. As a result, the 2011 national forecasts for sales activity and average price have been raised slightly.

National sales activity is forecast to reach 450,800 units in 2011, up less than one per cent from levels in 2010. CREA had previously forecast a decline of about one per cent for activity in 2011. Erosion in affordability due to higher prices has prompted a small downward revision to the outlook for sales in 2012.

British Columbia’s 2011 sales forecast has been revised slightly higher, in recognition that home sales there appear to have bottomed out sooner than previously anticipated. Stronger than expected activity in Ontario offset slightly softer than anticipated demand in Quebec, Manitoba, and Newfoundland in the second quarter of 2011. Accordingly, the Ontario sales forecast for 2011 has been raised, while the outlook for activity in Quebec, Manitoba, and Newfoundland has been revised lower.

National sales activity in 2012 is forecast to ease seven tenths of a percentage point to 447,700 units, which is roughly on par with its ten-year average.

“While there had been some talk of potential interest rate increases, that hasn’t happened,” said Gary Morse, CREA President. “In fact, mortgage interest rates have actually come down, and are now expected to remain low for the remainder of this year and into 2012. It’s a great opportunity to purchase a property with financing at very favourable rates.”

The national average home price is forecast to rise 7.2 per cent in 2011 to $363,500. This is an increase from the previous forecast, reflecting continued strong price growth in Vancouver in the second quarter of 2011 and acceleration in prices elsewhere, particularly Toronto. These two markets exert an outsized influence on the national average due to their relatively high level of activity and average price.

The national average home price is expected to moderate in the second half of 2011, returning to normal following a heavily skewed start to the year. In the first half of 2011, the national average home price was pushed upward by a surge in multi-million dollar sales in selected areas of Greater Vancouver and a higher than normal share of overall sales in more expensive markets.

“Some of the expected moderation in the national average price is seasonal, with average price peaking in many local markets during the second quarter of any year,” said Gregory Klump, CREA’s Chief Economist. “Elevated shares of provincial and national sales activity in Vancouver and Toronto are also expected to return to more normal levels, contributing to an anticipated moderation in average price in British Columbia, Ontario, and nationally.”

“Additional new listings are anticipated to result in a more balanced resale housing market in most provinces,” said Klump. “The national average price is forecast to stabilize in 2012, although at a slightly higher level than previously expected.”

For more information, please contact:
Pierre Leduc, Media Relations
The Canadian Real Estate Association
613-237-7111 or 613 884-1460
Email: pleduc@crea.ca

CREA Residential Market Forecast:

* Provincial weighted average price for Quebec; does not affect unweighted national average price calculations. Information on Quebec’s weighted average price calculation can be found at: http://www.fciq.ca/immobilier-statistiques-definitions.php

About The Canadian Real Estate Association

The Canadian Real Estate Association (CREA) is one of Canada’s largest single-industry trade associations, representing more than 100,000 real estate Brokers/agents and salespeople working through more than 100 real estate Boards and Associations.

Signals rate hike may be on the horizon

The Bank of Canada held its trend-setting Bank Rate at 1.25 per cent on July 19^th, 2011. This marks the seventh consecutive policy decision in which interest rates have been kept on hold.

The Bank has been warning for some time that interest rates will ultimately have to rise, but hinted more strongly in this most recent announcement that a hike was coming by removing the word “eventually” as to when that might happen.

The Bank said, “To the extent that the expansion continues and the current material excess supply in the economy is gradually absorbed, some of the considerable monetary policy stimulus currently in place will be withdrawn, consistent with achieving the 2 per cent inflation target.”

The Bank noted, however, that downside risks to the outlook remain elevated, with debt woes on both sides of the Atlantic, and that the outlook for a gradually improving domestic picture assumes these issues will be contained. As regards the European situation the Bank said, “The Bank’s projection assumes that authorities are able to contain the ongoing European sovereign debt crisis, although there are clear risks around this outcome.”

The Bank’s forcast for economic growth in Canada was little changed from its April forecast. The Bank now expects the economy will grow 2.8 per cent this year. This was revised slightly from the previous forecast of 2.9 per cent. The Bank kept its 2012 and 2013 growth forecasts unchanged at 2.6per cent and 2.1 per cent respectively.

Also unchanged were expectations that the output gap, a measure the spare capacity in the economy, would be closed by the middle of next year, and that headline inflation would remain above 3 per cent in the near term due to temporary factors, namely higher food and energy prices.

The core rate of inflation, which strips out those volatile items, hit 1.8 per cent in May owing to “persistent strength in the prices of some services.” The Bank now expects the core rate to “remain around 2 per cent over the projection horizon.”

As of July 19^th, 2011, the advertised five-year lending rate stood at 5.54 per cent. This is down 0.05 percentage points from 5.59 per cent on May 31^st, when the Bank made its previous policy interest rate announcement.

The Bank will make its next scheduled rate announcement on September 7, 2011, and many experts had already been forecasting a rate hike at that time. Given the slight change in tone in this most recent announcement, bets for a September hike will likely be increased further. That said, a lot could happen between then and now, particularly given the magnitude of current downside risks.

(CREA 07/19/2011)

OTTAWA – July 15, 2011 – According to statistics released today by The Canadian Real Estate Association (CREA), home sales activity over MLS® Systems of Canadian real estate Boards climbed in June 2011 compared to May.

Highlights:

• Sales activity climbed from May to June, with a big year-over-year gain reflecting falling demand in June 2010.

• Year-to-date sales remain in line with the ten-year average.
• The number of newly listed homes also rose from May to June.
• National housing market remains firmly entrenched in balanced territory.
• National average price still being skewed upward by the value of sales in expensive Vancouver neighbourhoods, with price gains in other markets providing additional loft.

Seasonally adjusted national home sales activity rose 2.6 per cent in June 2011 compared to the previous month. Two-thirds of local markets posted month-over-month gains in June.

Activity remained stable in Toronto while declining slightly in Vancouver and the Fraser Valley. Major markets that saw gains compared to May included Calgary, Montreal, Ottawa, London, Hamilton, and Victoria.

“Canadian housing demand remains resilient, thanks to low interest rates, job growth, and home buyer confidence in the economy,” said Gary Morse, CREA’s President. “That said, local housing market trends often differ from national trends, so buyers and sellers should consult their local REALTOR® to understand how the housing market is shaping up where they live.”

Actual (not seasonally adjusted) activity came in 10.8 per cent above June 2010 levels, but this largely reflects falling sales activity last June. This was also the case for the year-over-year increase in activity in May. Year-over-year comparisons in July may also be stretched by falling activity one year ago, since July 2010 marked the low point for activity last year.

“The Canadian housing sector remains on a solid footing,” said Gregory Klump, CREA’s Chief Economist. “The rise in monthly home sales activity at the end of the second quarter, upbeat business sentiment and hiring intentions, and signs that the Bank of Canada is in no rush to raise interest rates bode well for home sales activity and prices going into the second half of 2011.”

National sales activity was down 4.7 per cent in the second quarter compared to levels in the first quarter. This in part reflects how new mortgage rules announced in January and implemented at the end of March pulled sales forward into the first quarter at the expense of sales activity in April and May. Mortgage interest rates also rose in April and May, which may have moved some home buyers to the sidelines.

A total of 245,170 homes have traded hands via Canadian MLS® Systems in the first half of 2011. Year-to-date sales activity is running in line with the ten-year average, with monthly sales activity having come close to the ten-year average from January to June this year (Chart A). This highlights the relative stability of demand this year compared to the past three years, when activity swung significantly above and below average monthly levels.

The number of newly listed homes also rose nationally by 1.8 per cent from May to June. Gains in Toronto, Vancouver, and Ottawa contributed most to the national increase. The rise in new listings will be especially welcome news for home buyers in Toronto, where listings have been in short supply relative to demand this year.

The national housing market remains firmly planted in balanced territory. The national sales-to-new listings ratio, a measure of market balance, stood at 52.6 per cent in June, little changed from 52.2 per cent in May.

About 60 per cent of local housing markets in Canada were balanced in June. Almost half of the remainder can be classified as sellers’ markets, based on a sales-to-new listings ratio above 60 per cent.

The seasonally adjusted number of months of inventory stood at six months at the end of June on a national basis, holding steady compared to May. 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 national average price for homes sold in June 2011 was $372,700, up 8.7 per cent from the same month last year. The national average price is becoming less affected by the overall number of sales in some expensive Vancouver neighbourhoods, but is still being pitched higher by the value of those sales. Activity in these neighbourhoods has eased from levels reported in February and March, while sales elsewhere across Canada have risen in line with normal seasonal trends. As a result, property sales above $1 million in Vancouver West, West Vancouver, and Richmond now account for a smaller but still elevated share of national activity.

While the effect of Vancouver activity on the national average price has begun to wane, broadly based price gains in other housing markets are holding the national average price aloft. Close to 80 per cent of local markets posted year-over-year average price gains in June. This includes Toronto, where price gains reflect a tight balance between supply and demand.

PLEASE NOTE: The information contained in this news release combines both major market and national MLS® sales information 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 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 100,000 REALTORS® working through more than 100 real estate Boards and Associations.

Further information can be found at :
http://www.crea.ca/public/news_stats/media.htm.

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For more information, please contact:
Linda Kristal, Director of Communications
The Canadian Real Estate Association|
Tel.: 613-237-7111 or 613-447-4532
E-mail: lkristal@crea.ca

OTTAWA – June 15th, 2011 – According to statistics released today by The Canadian Real Estate Association (CREA), national resale housing activity remained stable in May compared to April.

Highlights:
• Sales activity held steady from April to May, but posted the first year-over-year gain in over a year due to falling demand in May 2010.
• Year-to-date sales are in line with the ten-year average.
• New listings also remained stable from April to May.
• National housing market remains firmly entrenched in balanced territory.
• National average price is still being skewed upward by historically high sales activity in certain Vancouver
neighbourhoods.

Seasonally adjusted national home sales activityedged down by less than one per cent in May 2011 compared to the previous month. Among major markets were activity declines in Vancouver and Ottawa, offsetting gains in Edmonton and Toronto, where sales reached the second highest level on record for the month of May.

Actual (not seasonally adjusted) activity came in 2.7 per cent above levels reported last May. This was the first year-over-year increase in more than a year, reflecting falling sales activity in May 2010. Activityfell sharply last year between April and July, with May marking the mid-point of that slide. Although activity has been more stable this year, last year’s sales volatility is expected to continue to affect yearover-year comparisons in the months ahead.

A total of 196,749 homes have traded hands via Canadian MLS® Systems so far this year. This is in line with the ten-year average for year-to-date activity in May.

“The Canadian housing market has seen some big ups and downs in recent years, making national sales activity so far this year look like something of a Goldilocks story by comparison – not too hot, not too cold,” said Gary Morse, CREA’s President. “Since local housing market trends often differ from national trends, buyers and sellers should consult their local REALTOR® to understand how the housing market is shaping up where they live.”

Seasonally adjusted new residential listings were little changed from April to May, edging up one tenth of a percentage point. The number of newly listed homes fell in Vancouver, Fraser Valley and the Okanagan region in May, offsetting small gains in Toronto and Montreal.

With sales and new listings holding steady on a national basis in May, the resale housing market remained firmly planted in balanced territory. The national sales-to-new listings ratio, a measure of market balance, stood at 52.1 per cent in May, little changed from 52.5 per cent in April.

Based on a sales-to-new listings ratio of between 40 and 60 per cent, housing markets were balanced in 62 of 101 real estate boards in Canada. Less than half of the rest can be characterized as sellers’ markets, based on a ratio above 60 per cent. “For the most part, sellers’ markets became slightly more balanced than the previous month,” said Gregory Klump, CREA’s Chief Economist. “Toronto stood out as an exception, with sales activity there growing faster than new supply.”

The seasonally adjusted number of months of inventory stood at 6.1 months at the end of May on a national basis. This is little changed compared to the six months of inventory at the end of April 2011. 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 national average price for homes sold in May 2011 was $376,817, up 8.6 per cent from the same month last year.

A number of compositional factors skewed the national average price upward in May. These factors include historically high sales activity in selected pricey Vancouver neighbourhoods and broadly based price gains in Toronto, where supply remains tight relative to demand. If Vancouver sales are excluded from the calculation, the year-over-year change in the national average price amounts to 5.6 per cent; excluding Toronto and Vancouver shrinks the increase to 3.7 per cent.

“Changes in the national average home price reflect variations in home sales activity across and within local markets,” said Klump. “Failure to recognize changes in the mix of sales activity can lead to misinterpretation of average price fluctuations. It can also give rise to faulty predictions of broadly based home price deflation by way of price correction.”

PLEASE NOTE: The information contained in this news release combines both major market and national MLS® sales information 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® 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 100,000 REALTORS® working through more than 100 real estate Boards and Associations.

Further information can be found at http://www.crea.ca/public/news_stats/media.htm.

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For more information, please contact:

Pierre Leduc, Media Relations
The Canadian Real Estate Association
P: 613-237-7111 or 613-884-1460
E: pleduc@crea.ca