CREA: sales gain 6.6% in March
OTTAWA – Sales through its Multiple Listing Service (MLS) continued to climb in March, according to the latest figures from the Canadian Real Estate Association (CREA). Sales rose 1.1% on a month-over-month from February and gained 6.6% from March 2015, setting a new monthly sales record. The national average price also set a new high at $548,517.
On a year-over-year basis, the realtors’ group said sales were up in about 75% of all local markets, with the biggest increase being posted in the Greater Toronto Area (GTA), which was partially offset by a decline in the number of homes changing hands in Greater Vancouver.
“The current strength in national home sales mainly speaks to what’s going on in and around Toronto,” CREA president Andrew Peck said in a statement. “Elsewhere, sales either remain slow or well below previous heights.”
“The latest Canadian housing market statistics suggest that the drum-tight housing market balance in Toronto and nearby cities stands in contrast to housing market trends elsewhere in Ontario and other provinces,” CREA chief economist Gregory Klump added. “Because housing market balance varies by location, federal or provincial policy measures aimed at cooling demand in Toronto risk destabilising housing markets elsewhere.”
The number of newly listed homes rose 2.5% in March 2017, led by gains in the GTA, Calgary, Edmonton and the Lower Mainland of British Columbia. With new listings climbing more than sales, the national sales-to-new listings ratio eased to 67.4% in March compared to 68.3% in February.
However, as the sales-to-new listings ratio is higher than 60 it’s considered to be a sellers’ market. CREA said 60% of all local housing markets were considered sellers’ markets in March, particularly in the GTA and southwestern Ontario.
While the months of inventory measure fell to its lowest point in almost a decade to 4.1 in March – compared to 4.2 in February – it stood at or below one month in the GTA and most parts of southwestern Ontario.
While average prices did ease slightly in some markets in Alberta and Saskatchewan, the actual average price for homes sold in March was $548,517 – up 8.2% year-over year.
However, excluded the GTA and Greater Vancouver reduces the national average price to $389,726.
In her note, Diana Petramala of TD Economics focused her attend on the market in Ontario, where prices continue to race ahead of underlying economic fundamentals such as population and household incomes.
“The speed at which home prices are rising have become a cause for concern with unsustainable home price growth at least in part attributed to speculative activity,” she pointed out. “The key question is however, ‘what will stop it?’ As we look into the rest of 2017, the economic drivers are supportive of a continued acceleration in housing activity. The economy appears to be on a better footing, while interest rates have come down in the last month from their post-U.S. election peaks.
She noted the best available five-year fixed mortgage rate is down 10 basis points from just a month ago and believes if these rates persist, price growth in Ontario could be in excess 25% this year. In turn, this could force the Ontario government to take some form of action, which could come as early as next week when the 2017 budget is tabled in the Legislature.
“As for the rest of the country, low interest rates will help offset the impact of relatively modest economic conditions and past changes to mortgage insurance qualification guidelines through most of 2017,” Petramala said, adding the market in the rest of the country is likely to have a more sustainable pace this year than that in Ontario.