Photo: Jay Woodworth
An uptick in Canadian home sales in February was enough to push activity to its highest level in more than eight years on a seasonally adjusted basis, according to the Canadian Real Estate Association (CREA).
Compared to January, existing home sales tracked through MLS systems from coast to coast edged up 0.8 per cent for the busiest month for sales activity since June 2007, with local markets in British Columbia (Okanagan Region and Fraser Valley) and Ontario (Greater Toronto Area) posting the largest gains following earlier month-over-month sales increases in January.
“Two of Canada’s hottest housing markets look set to stay that way heading into the spring homebuying season,” says CREA president Pauline Aunger in a statement. “Meanwhile, other major urban markets elsewhere in Canada are well balanced or have ample supply,” she continues.
The unadjusted average sale price of Canadian homes soared to $503,057 in February, 16.4 per cent higher than it was during the same time last year.
However, without Greater Vancouver — which saw the average sale price climb to $1,104,133 in February — and the Greater Toronto Area (GTA) — where the average sale price is now $685,278 — the national home price in February would be $355,235, up 8.7 per cent from a year ago.
“Even then, the gain reflects a tug of war between strong average price gains in housing markets around the GTA and the Lower Mainland of British Columbia versus flat or declining average prices elsewhere in Canada,” says CREA.
Remove British Columbia and Ontario from the national calculations, and the average price of a Canadian home last month tumbles further to $291,510, which represents a 1.4 per cent year-over-year decline.
TD economist Diana Petramala noted the impact new mortgage rules, which came into effect on February 15th and increased minimum down payments on some insured mortgages between $500,000 and $1 million, may have had on last month’s sales.
“Some of the strength in Canada’s most expensive markets may reflect some buyers rushing to get ahead of the new rules,” she says in a research note.
“As such, we could see some payback in the coming months,” she says, adding, “Nonetheless, these rules are very targeted at a small share of the market and will have only a modest impact on existing home sales nationally.”
Recent activity and the expectation that the overnight interest rate will remain at the current level until mid-2017 has led CREA to update its sales forecast for this year. The association is now calling for Canadian home sales to hit 511,400 units by the end of this year, up 1 per cent from 2015.
British Columbia is expected to lead the way for sales increases, as annual activity is now forecasted to surge 11.8 per cent in 2016. Meanwhile, CREA predicts the number of homes changing hands in Alberta this year will plummet 18.7 per cent.
Although the association calls for “the continuation of very strong demand” it has 2016 sales pegged for a modest increase of 0.3 per cent due to a dearth of available homes on the market.
By February’s end, it would take 5.2 months for Canada’s inventory of available homes to sell out if activity remained at current levels.
CREA says tight supply in British Columbia and Ontario markets is dragging the national inventory level down.
“The number of months of inventory is currently sitting at or below two months in the Lower Mainland of British Columbia, the GTA, St. Catharines, Brantford, Oakville-Milton and Guelph,” it says.