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The Canadian residential market is falling …



According to statistics released today by The Canadian Real Estate Association (CREA), residential sales declined sharply from January to February 2019.

Highlights:

  • The Canadian residential market plummeted 9.1% month-over-month in February.
  • Real turnover (unadjusted) decreased by 4.4% on an annual basis.
  • The number of newly registered homes fell by 3.2% from one month to the next.
  • The MLS® real estate price index (MLS® IPP) was virtually unchanged (-0.1%).
  • The average selling price in Canada fell 5.2% on an annual basis.

Residential sales via Canadian MLS® systems plummeted by 9.1% month-on-month in February 2019 and reached the lowest level since November 2012. The one-month decrease the other was the largest since the crisis simulation ("B-20 Directive ") entered into force in January 2018.

The number of houses that changed ownership decreased compared to the previous month, in 75% of all local markets, even in large cities.

Real sales (not seasonally adjusted) decreased by 4.4% to the lowest level in February since 2009. They were also 12% below the 10-year average for February. In British Columbia, Alberta and Newfoundland and Labrador, sales were more than 20% below the ten-year average of the month.

"It is difficult for prospective buyers to swallow stress testing for mortgages, while policymakers say it delivers the intended effects," says Barb Sukkau. "A reduction in the number of eligible buyers also affects the selling owners. The impact of tighter mortgage rules differs depending on the local housing market. As a result, AIT brokers and agents remain your best source of information and guidance when negotiating the buying or selling a home during this transition period, "she says.

"In February, home sales fell in many Canadian regions, both large and small," said Gregory Klump, chief economist for CREA. "The real estate sector is further slowing the overall economic growth of Canada. Only time will tell if the successive changes in mortgage rules have been too severe, because the effects of political decisions are not felt until after the fact. It is hoped that policy makers will find a way to refine the regulations to succeed both in the affordability of homes and in managing the risks of lending. "

The number of newly registered homes fell 3.2% in February, particularly in the regional municipalities around the city of Toronto, followed by Hamilton-Burlington, Calgary, Edmonton and Winnipeg.

As the fall in sales was greater than the number of new registrations in February, the national ratio of sales to new offers fell to 54.1% compared to the January ratio of 57.6%. In addition to its monthly volatility, this measure of market equilibrium remains close to its long-term average of 53.5% since the beginning of 2018.

The best way to assess whether local conditions favor buyers or homeowners is to determine how much and how long the market balance is above or below the long-term average. The result that falls within a standard deviation from the long-term average generally indicates a balance between market conditions.

If we compare the ratio between sales and new offers with the long-term average, it appears that around 70% of all local markets were in balance in February 2019.

In addition, the number of months of stock is another important measure of the balance between supply and demand. This is the time it would take to sell all current inventory at the current sales rate.

In this respect, there was 5.7 months of national inventory at the end of February 2019, the highest level in three and a half years, and slightly more than its long-term average of 5.3. months. That said, there are significant differences at the regional level. Stocks are well above the long-term average in the Prairie Provinces and Newfoundland and Labrador; therefore buyers in this region have many choices from the lists that are available to them. For comparison: the measure remains far below its long-term average in Ontario and the Maritimes.

The general and compound MLS® (IPP MLS®) property price index changed very little (-0.1%) in February 2019 in February 2019. However, this is the first decline since almost 10 years old.

Flats recorded a price increase of 2.4% on an annual basis in February, while house prices rose by 1%. For comparison: in February, one-storey and two-storey houses with single-family homes fell by 1.7% and 1% on an annual basis, respectively.

The trends continue to vary widely in the 17 real estate markets, followed by the MLS® IPP. Annual results remain varied in British Columbia. Prices are lower in Greater Vancouver (-6.1%) and the Fraser Valley (-2.8%). On the other hand, prices rose 3% in Victoria and 7.7% elsewhere on Vancouver Island.

In the Greater Golden Horseshoe residential markets, followed by the Index, the prices of reference properties in Guelph (+ 6.8%) were higher than in the previous year in the Niagara region (+ 6.5%). %), Hamilton-Burlington (+ 5%) and Greater Toronto (+ 2.3%). In the meantime, house prices in Oakville-Milton (+ 0.2%) have changed little on an annual basis, while prices in Barrie & District are far below those of the previous year. one year (-4.3%).

In Prairies, the inventory of homes for sale is generally higher than demand, and the price of real estate has fallen compared to last year. The reference prices decreased by 4.4% in Calgary, 4.5% in Edmonton, 5.1% in Regina and 3% in Saskatoon. House prices in these cities are likely to remain low until a balance between supply and demand is reached.

Real estate prices rose 7.4% year-on-year in Ottawa (driven by a 10.8% rise in house prices), 6.2% in Greater Montreal (pushed by a 7.8% rise in apartment prices) ) and 1.6% in Greater Moncton (thanks to a 7.9% rise in house prices).

The MLS® PPI is the best way to assess price trends, as the averages are subject to significant distortion due to fluctuations in the sales mix from month to month.

The actual average (non-adjusted) price of items sold in February 2019 was $ 468,350, a decrease of 5.2% compared to February 2018.

The national average price is largely skewed by sales in Greater Vancouver and Greater Toronto, the two most active and expensive markets in Canada. If these two markets are excluded from the calculation, the average price drops by almost $ 100,000 compared to the national average (slightly less than $ 371,000).


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