The Canadian housing market continues to defy warnings of a serious decline, prompting the Canadian Real Estate Association to modify their previous growth forecast as sales improve to pre-CMHC-rule-change conditions in some local markets.
National home sales increased in two thirds of major urban markets, and grew nationally by 3.6 per cent from April to May, along with a 1.9 per cent increase in newly listed properties, and a 3.7 per cent increase to the national sales price.
Albertan powerhouses Calgary and Edmonton are in for improvement, along with Vancouver, Montreal, Halifax-Dartmouth, as well as the Greater Toronto Area and other key Ontario markets.
CREA now forecasts 443,400 units will move in 2013, a decline of only 2.5 per cent from 2012 levels. In the association’s March forecast, it was predicted that activity would decline by 2.9 per cent. This year, Alberta and PEI markets are expected to surpass year-over-year sales activity.
Signs Of A Stabilizing Market
While still 2.6 per cent below activity levels this time last year, this growth indicates that the market is making gains toward recovery, as the shock of last summer’s CMHC mortgage rules subside and buyers re-enter the market.
According to Gregory Klump, chief economist at CREA, consistent growth across Canada rather than select markets is a positive economic indicator. “Until recently, mixed sales trends across the country taken together had resulted consistently in a stable national trend,” he stated in a release. “The difference in May was that sales improved in so many markets at the same time.”
Klump adds that while one month worth of data doesn’t signal full recession recovery, these gains, combined with recent positive economic trends, provide reason for optimism: “Canadian resale housing market results provide further evidence of the widely anticipated firming trend for Canadian economy,” he stated.
In addition to this positive data, the CMHC reported last week that new housing starts market saw improvements in April despite previous cautions of oversupply, and a job boom of 95,000 positions in May pushed Canadian unemployment down to 7.1 per cent.
2014 To Be A Stronger Year For Sales
CREA anticipates sales will bounce back by 4.7 per cent next year to 464,300 units, which remains just shy of the 10-year average. Prices, however, will continue their upward trajectory, with the national average home price to rise to $370,900 by the end of 2013. Not surprisingly, Alberta will see the biggest price increase in 2014 at 3.4 per cent. Newfoundland Labrador, Saskatchewan and Manitoba will grow slightly ahead of inflation, while Quebec and New Brunswick markets will remain flat. Growth of 0.5 – 1.5 per cent will be seen in all other provinces.
The numbers show that Canadians are still keen on home ownership, and, while potentially saving for larger down payments as a result of last summer’s CMHC rules, are not abstaining from the market for long.
“Canadians remain confident about the value of home ownership,” states Klump. “Job market trends and low interest rates remain supportive for Canada’s housing sector, so we remain upbeat about prospects for sales and average prices this year and next.”