The latest numbers from the Canadian Real Estate Association are in – and they show the market is dipping a toe into balanced territory.
While a slight decrease was experienced from January to February – home sales dropped 2.1 per cent month to month – negative activity was countered by growth in some of Canada’s smaller markets.
“A rebound in sales in some of Canada’s largest and most expensive markets, similar to those we saw following previous mortgage rule changes, has so far remained elusive,” said Wayne Moen, president of CREA in a release with the findings. “That said, the slowdown in many big markets is being offset by activity in many smaller and more affordable markets that were less impacted by last year’s mortgage rule changes.”
Sales Continue to Slide
The number of newly listed houses fell by 1.2 per cent from January to February – their lowest level since November 2010 – while the average national sale price saw a one percent decrease to $368,895 on a year-over-year basis in the month.
“February 2012 saw an extra selling day due to the leap year,” said Gregory Klump, Chief Economist at CREA. “However, the year-over-year decline between this February and last year is largely a reflection of demand that is well off from 2012.”
What’s To Come This Year
National home sales are expected to reach 441,500 units in 2013 – a slightly hopeful stance compared to the 2.9 per cent decline seen in 2012.
CREA anticipates most of this growth to occur in Alberta and Manitoba, with Saskatchewan, Ontario, Quebec and Nova Scotia in for a decline. British Columbia, Newfoundland and Labrador are also set for downward movement, though on a smaller scale.
“Strong sales in the first half of last year will cast a long shadow over year-over-year comparisons during the first half of 2013 in many parts of the country,” says the report.
A Rosier 2014
CREA also updated its resale housing forecast and extended its outlook to include 2014, and forecasts that national sales activity will rebound by 4.5 per cent to 461,200 units, and prices to increase by 1.7 per cent to $368,700.
It’s as low but steady improvement but would still leave annual sale nearly one per cent below the 10-year average. Any hope that markets will reach the pre-CMHC mortgage change conditions seen in early 2012 are on hold for the time being.
It may surprise many that Canada’s notoriously most expensive province, British Columbia, will see the strongest sales next year, expected to increase to 9.5 per cent. Keep in mind, however, that this increase is also based on the province’s staggeringly low sales precedent.
More Mortgage Customers Locking In
While the numbers show markets will remain cool for some time, Canadian mortgage consumers are taking the opportunity to snap up record low mortgage rates while their cheap, according to a poll by CIBC.
Forty six per cent of Canadians believe today’s low rates will remain unchanged over the next year while 45 per cent of those polled said they would choose a fixed mortgage rate if they had to decide today, echoing those sentiments.
Just over a quarter of Canadians said they’d still choose a variable rate mortgage while another 25 percent were undecided.
“Your mortgage is one component of your overall financial plan, which means you can’t choose a mortgage purely on rate,” said Colette Delaney, Executive Vice President of Mortgage, Lending, Insurance and Deposit Products, for CIBC. “A number of factors, including amortization, the flexibility to make extra payments, and whether or not you have other debt should all be considered when choosing the mortgage that’s right for you.”