Canadian home sales jumped in November, as buyers rushed in to avoid new mortgage rules which come into effect in the new year.
According to the Canadian Real Estate Association (CREA), national home sales rose 3.9 per cent in November, a spike well above October’s 0.9 per cent increase.
“Some home buyers with more than a twenty per cent down payment may be fast-tracking their purchase decision in order to beat the tougher mortgage qualifications test coming effect next year,” writes CREA president Andrew Peck, in a statement.
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Announced in October, the mortgage test will come into effect on January 1, and will require all uninsured mortgage borrowers to qualify against the Bank of Canada’s five-year benchmark rate, or at their contract mortgage rate plus an additional 2 per cent.
According to CREA chief economist Gregory Klump, it’s unclear what the test will mean for sales in 2018.
“It remains to be seen whether stronger momentum now will mean weaker activity early next year once new mortgage regulations take effect beginning on New Year’s day,” writes Klump, in a statement.
CREA is forecasting a home sales decline of 5.3 per cent in 2018, as the market adjusts to the new rules.
Here are 9 facts to help make sense of November’s sales surge:
1. National home sales rose 3.9 per cent in November, led by a whopping 16 per cent jump in sales in the GTA.
2. That puts sales activity a little over halfway between the peak reached in March, and the low recorded in July.
3. While this spike marks the fourth month-over-month sales increase, it is also the first year-over-year increase in months. Sales were up 2.6 per cent from November 2016, setting a new November record.
4. National new home listings were up 3.5 per cent, led by an increase in supply in the GTA.
5. The national sales-to-new-listings ratio was 56.4 per cent in November, a slight increase from October’s 56.2 per cent. A ratio of between 40 and 60 per cent is considered consistent with a balanced housing market, with ratios above and below indicating buyers’ and sellers’ markets, respectively.
6. The aggregate composite MLS housing price index rose by 9.3 per cent year-over-year in November. It’s a deceleration from record gains in March, and the smallest year-over-year increase since February 2016.
7. Apartment units had the largest price increase, at 19.4 per cent year-over-year, while single-family home prices increased just 6 per cent.
8. The actual national average price for homes in November was $504,000 up 2.9 per cent year-over-year. The average was boosted by Vancouver and the GTA — without them, it would fall to just $381,000.
9.The average Canadian home price is forecast to drop by 1.4 per cent in 2018, to $503,100, largely due to a cooler GTA market.