Balance for Canadian Housing Market: CREA

Stability, generally speaking, was the theme from last month, according to new data released by CREA. For many, after swings from high to low swift enough to cause motion sickness, this is welcome respite.
The report says, “Seasonally adjusted national home sales activity edged 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 sales activity was a manageable 2.7% higher in May 2011 than in April. This also marks the first year-over-year increase in over a year. Despite these gains, the tremendous volatility seen last year is expected to put downward pressure on year-over-year numbers for the coming months.

“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."

Again there was balance and stability with listings too, with gains in some regions offsetting drops in others. They fell in Vancouver, Fraser Valley and the Okanagan region, but rose modestly in Toronto and Montreal.

CREA paints a picture of balance: “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. “

"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 sales-to-new listings ratio was reported to be between 40 % and 60%. Of the 101 Real Estate Boards in the country, 62 were balanced.

Looking at prices, skyrocketing prices in Vancouver are continuing to skew national prices upwards. The flood of foreign investors continues to snap up properties- many of them luxury ones- at top dollar. Toronto too, is placing upward pressure on prices across the country.

In May, the average price nationally was 8.6% over last year and rested at $376,817. If you take Vancouver out of the calculation, the average price comes back down to earth, increasing by only 5.6%. If you take out both Vancouver and Toronto, the average price is up only 3.7%.

"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."
Related Articles

BCREA: Sales Down, Prices Up
Big Banks Lowering Mortgage Rates
Balance Comes to Vancouver Island Area
Canadian Businesses to Fuel Economic Growth: CIBC
Home Ownership More Affordable: RBC