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Canadian home sales little changed in November

Ottawa, ON, December 16, 2013 – According to statistics released today by The Canadian Real Estate Association (CREA), national home sales were little changed in November compared to October. 

Highlights:

  • National home sales edged 0.1% lower from October to November.
  • Actual (not seasonally adjusted) activity was 5.9% above November 2012 levels.
  • The number of newly listed homes rose 1.8% from October to November.
  • The Canadian housing market remains in balanced territory.
  • The national average sale price rose 9.8% on a year-over-year basis in November.
  • The MLS® Home Price Index (HPI) rose 4.1% year-over-year in November.

The number of home sales processed through the MLS® Systems of Canadian real estate Boards and Associations and other co-operative listing systems was little changed in November 2013 compared to October, edging down by one tenth of one per cent.

National sales activity in November stood 3.4 per cent below the peak reached in September, providing further evidence that activity in the later summer and early fall was likely boosted by homebuyers with pre-approved mortgages at lower than current interest rates jumping into the market before their pre-approvals expired.

“Tightened mortgage regulations, combined with the recent increase in the five-year mortgage rate, have affected housing markets differently depending on their location,” said CREA President Laura Leyser. “Because all real estate is local, your REALTOR® remains your best resource for understanding how the housing market is shaping up where you live or might like to.”

Local markets where sales improved on a month-over-month basis ran roughly even with the number in which activity edged back in November, with a decline in Greater Toronto offsetting an increase in Greater Vancouver.

chart of interest01 (E)November’s seasonally adjusted sales figure stood slightly above (0.7 per cent) but roughly in line with the average for monthly sales over the past 10 years.

Actual (not seasonally adjusted) activity was up 5.9 per cent from November 2012. Year-over-year increases were posted in about half of all local markets, led by gains in Greater Vancouver, Calgary, Edmonton, and Greater Toronto.

chart of interest02 (E)On an actual (not seasonally adjusted) basis, a total of 434,678 homes have traded hands across the country so far this year. This represents an increase of 0.2 per cent compared to levels recorded in the first 11 months of 2012.

“While there has been a lot of volatility in sales activity from month to month, sales for the year to date are on par with fairly steady levels posted for the same time period in each of the past five years,” said CREA Chief Economist Gregory Klump.

The number of newly listed homes rose 1.8 per cent on a month-over-month basis in November. New supply was up in a little over half of all local markets, with a jump in BC’s Lower Mainland outstripping small declines in Greater Toronto and Ottawa.

With sales activity flat on a month-over-month basis and new listings up, the national sales-to-new listings ratio slipped to 53.4 per cent in November compared to 54.5 per cent in October. This remains well within balanced market territory, as has been the case since early 2010.

Based on a sales-to-new listings ratio of between 40 to 60 per cent, about three out of every five local markets were in balanced market territory in November.

The number of months of inventory is another important measure of balance between housing supply and demand. It represents the number of months it would take to completely liquidate current inventories at the current rate of sales activity.

There were 6.0 months of inventory at the national level at the end of November, unchanged from one month earlier. As with the sales-to-new listings ratio, the current level of the months of inventory measure indicates that the Canadian housing market remains well balanced.

“Most housing markets are in balanced market territory, including in many large urban centres where sales are below peaks reached earlier this year,” said Klump. “On balance, current trends provide more evidence that the Canadian housing market remains well behaved while interest rates remain low.”

The actual (not seasonally adjusted) national average price for homes sold in November 2013 was $391,085, an increase of 9.8 per cent from the same month last year.

The size of year-over-year average price gains continues to reflect the decline in sales activity last year in some of Canada’s larger and more expensive markets which caused the national average price to drop at that time.

Removing Greater Vancouver and Greater Toronto from national average price calculations, the year-over-year increase is more than cut in half to 4.3 per cent.

The MLS® Home Price Index (MLS® HPI) provides a better gauge of price trends, as it is not affected by changes in the mix of sales activity the way that average price is.

natl_chart_of_interest03_hi-res_enThe Aggregate Composite MLS® HPI rose 4.11 per cent compared to November 2012. Year-over-year price growth picked up among all property types tracked by the index with the exception of townhouse/row units. (Chart C)

Year-over-year price gains were led by one-storey single family homes (+4.88 per cent). This was closely followed by two-storey single family homes (+4.59 per cent), townhouse/row units (+3.13 per cent) and apartment units (+2.46 per cent).

Year-over-year price growth in the MLS® HPI was mixed across housing markets tracked by the index, led by Calgary (+8.82 per cent) and Greater Toronto (+5.69 per cent). Greater Vancouver recorded the first year-over-year increase (+1.02 per cent) since prices turned lower last year.

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PLEASE NOTE: The information contained in this news release combines both major market and national sales information from MLS® Systems from the previous month.

CREA cautions that average price information can be useful in establishing trends over time, but does not indicate actual prices in centres comprised of widely divergent neighbourhoods or account for price differential between geographic areas. Statistical information contained in this report includes all housing types.

MLS® Systems are co-operative marketing systems used only by Canada’s real estate Boards to ensure maximum exposure of properties listed for sale.

The Canadian Real Estate Association (CREA) is one of Canada’s largest single-industry trade associations, representing more than 106,000 REALTORS® working through more than 90 real estate Boards and Associations.

Further information can be found at http://crea.ca/statistics.

CREA Updates Resale Housing Forecast

Ottawa, ON, December 16, 2013 – The Canadian Real Estate Association (CREA) has updated its forecast for home sales activity via the Multiple Listing Service® (MLS®) Systems of Canadian real estate Boards and Associations in 2013 and 2014.

Stronger than expected activity through summer and early autumn was widely thought to reflect the transient influence of buyers with pre-approved mortgage financing making purchases before their lower pre-approved rates expired. A drop-off in sales during the fourth quarter to date further suggests this was indeed the case.

Chart1Although monthly sales volatility has increased in recent years, particularly surrounding changes to mortgage rules, national activity on an annual basis has remained remarkably stable. For the sixth consecutive year, annual sales in 2013 will remain within short reach of 450,000 units.

Activity and prices have remained slightly stronger than expected in Western Canada. By comparison, the sales and pricing environment has generally been softer in Eastern Canada.

“Real estate market trends and outlooks can be very different depending on the region and community due to many local factors,” said Laura Leyser, CREA President. “For that reason, buyers and sellers should talk to their REALTOR® about the housing market outlook where they live or might like to.”

Sales are projected to reach 458,200 units for the year. This represents an increase of eight tenths of one per cent from last year.

Sales projections have been revised slightly upward for British Columbia, Alberta, Saskatchewan, Manitoba, and Ontario. Previously, British Columbia and Alberta were the only provinces where forecast annual sales for 2013 were expected to top 2012 levels. Ontario sales are now also projected to increase marginally.

In 2014, national activity is forecast to climb to 475,000 units (+3.7 per cent). Most of the increase reflects the weak start to 2013, which is not expected to recur in early 2014.

British Columbia is still forecast to post the strongest sales increase in 2014 (+8.4 per cent), reflecting the return to of activity to more normal levels compared to a weak start to the year in 2013. Most other provinces are forecast to post gains in the range between two and four per cent.

Average prices have remained firmer than expected, in large part due to a rise in the share of national sales among more active and pricier markets as compared to last year.

The national average home price is projected to rise by 5.2 per cent to $382,200 in 2013, with similar gains in the Prairie provinces, Ontario, and Newfoundland and Labrador. Smaller gains are projected in other provinces.

“Most housing markets are well balanced, including many large urban centres,” said Gregory Klump, CREA’s Chief Economist. “Housing price gains are always stronger in places where supply is tight relative to demand, such as we’re seeing in Calgary and in parts of southern Ontario including the low rise market in Toronto. Prospects for price appreciation will be limited in parts of Quebec and some areas in the Maritimes, where competition among sellers has increased.”

The national average price is forecast to rise a further 2.5 per cent in 2014 to $391,100.  As with sales activity, much of the increase reflects prices that were still being skewed lower in the first quarter of 2013 after having softened in late 2012.

Alberta is forecast to post the biggest rise in average price in 2014 (3.4 per cent), with gains in Saskatchewan, Manitoba, and Newfoundland and Labrador running just ahead of overall consumer price inflation, and the average price increase in Ontario running just below it.

Chart2

Chart3

* Provincial weighted average price for Quebec does not affect unweighted national average price calculations. Information on Quebec’s weighted average price calculation can be found at: http://www.fciq.ca/immobilier-statistiques-definitions.php

1 The sales territory covered by the Saskatoon Region Association of REALTORS® has been expanded. Data revisions were possible back to January 2011. Part of the 2011 annual percentage increase in sales reflects that change.

2 Effective January 1, 2012, the Prince Edward Island Real Estate Association began reporting sales at the point when non-title conditions had been satisfied in the Agreement of Purchase & Sale. Previously, sales were reported at the point of closing. As such, data before and after January 1, 2012 are not directly comparable.

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About The Canadian Real Estate Association
The Canadian Real Estate Association (CREA) is one of Canada’s largest single-industry trade associations, representing more than 100,000 real estate Brokers/agents and salespeople working through more than 100 real estate Boards and Associations.

Bank of Canada expects soft landing for housing market

The Bank of Canada announced on December 4th 2013 that it was keeping its trend-setting overnight lending rate at 1 per cent. It has been at this level since September 2010.

Consistent with its previous announcement and Monetary Policy Report (MPR) in October, the Bank is no longer indicating that its next move will be an increase in interest rates.

The Bank has also indicated that it is more comfortable with the situation in the housing market and “continues to expect a soft landing.” The Bank also noted that recent strength in the housing market is “consistent with updated demographic data and a pulling forward of home purchases in light of favourable financing conditions.”

Third quarter growth in the United States was stronger than the Bank had forecast. However, some of that pickup was due to temporary factors and the global economy is still expanding at a modest rate as the Bank had predicted in its October MPR.

Despite a pickup in Canadian GDP growth in the third quarter, the Bank acknowledged that “its composition does not yet indicate a rebalancing towards exports and investment.”

The Bank still expects that the output gap will close by the end of 2015, but dropped any mention of when the inflation rate is expected to return to the two per cent target.

The most recent reading of the Consumer Price Index put inflation at 0.7 per cent in October, which is below  falls outside of the Bank’s official target band of one to three per cent.

In the final paragraph of the release the Bank noted that the “risks associated with elevated household imbalances have not materially changed, while the downside risks to inflation appear to be greater.” This tips the balance of their next move slightly towards a decrease in rates rather than an increase. However, unless the economic outlook deteriorates further the most likely scenario is that the Bank will keep interest rates on hold for quite some time yet.

As of December 4th, 2013, the advertised five-year lending rate stood at 5.34 per cent, unchanged from the previous Bank rate announcement on October 23rd.

The next interest rate announcement will be on January 22nd 2014 and will be accompanied by an update to the Monetary Policy Report.

(CREA 12/4/2013)

Financial Consumer Agency of Canada and REALTORS® discuss homebuyers’ financial literacy

Toronto, ON – November 26, 2013 – Earlier today, REALTORS® hosted Lucie Tedesco, Commissioner of the Financial Consumer Agency of Canada (FCAC) at a roundtable to discuss Canadian homebuyers’ financial literacy.

Enhancing Canadians’ financial literacy is a priority shared by the federal government and REALTORS®. Today’s roundtable with the Commissioner allowed representatives from The Canadian Real Estate Association (CREA), the Ontario Real Estate Association (OREA) and the Toronto Real Estate Board (TREB) to share research and experiences with homebuyers’ financial preparedness with representatives from FCAC.

“The Financial Consumer Agency of Canada is committed to helping Canadians make responsible financial decisions,” stated Lucie Tedesco, Commissioner of the Financial Consumer Agency of Canada. “Our collaboration with REALTORS® does just that, by providing information that helps consumers better understand the costs of buying a home.”

A 2012 Nanos Research1 study, commissioned by CREA, found that more than 63% of respondents indicated a “major need” for more information about the financial details of buying a home.  That figure rose to over 70% when considering respondents between the ages of 18 and 29 only. Further, 86% believed that Canadians would benefit from a toolkit that would help them better understand the financial aspects relative to the purchase of a home2.

“Buying a home is an intensely personal – and sometimes emotional – decision.  REALTORS® play a key role bridging the gap between the emotional and the practical financial considerations,” said Laura Leyser, President of CREA. “By providing Canadians with the knowledge, skills and confidence to make responsible home buying decisions, financial literacy contributes to the long-term stability of the housing market”

As a result, FCAC and CREA joined efforts in 2012 to develop and launch the Homebuyers’ Road Map, providing first-time homebuyers the tools needed to make a responsible financial decision about one of the largest purchases they will make in their lifetimes.

“REALTORS® are on the front lines of financial literacy every day, helping potential buyers understand the financial implications of home ownership,” said Phil Dorner, President of the Ontario Real Estate Association. “Canadians, particularly younger buyers, crave information about the financial details of buying a home.”

One year after the official launch of the Homebuyers’ Road Map, representatives from the real estate profession met with FCAC to share feedback from those who work closest with buyers and sellers, in order to amplify the efforts undertaken to date.

“The Homebuyers’ Road Map arms REALTORS® with an educational resource to help Canadians make responsible decisions about one of the largest purchases most will ever make – buying or selling real estate,” shared Dianne Usher, President of the Toronto Real Estate Board.

The Homebuyers’ Road Map is available online at http://crea.ca/sites/default/files/Homebuyers_Road_Map_EN.pdf.

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ABOUT CREA: The Canadian Real Estate Association (CREA) is one of Canada’s largest single-industry trade associations, representing more than 106,000 REALTORS® working through more than 90 real estate Boards and Associations.

ABOUT OREA: The Ontario Real Estate Association represents over 56,000 brokers and salespeople who are members of the 41 real estate boards throughout the province. OREA serves its REALTOR® members through a wide variety of professional publications, educational programs, advocacy, and other services. http://www.orea.com/

ABOUT TREB: Greater Toronto REALTORS® are passionate about their work. They are governed by a strict Code of Ethics and share a state-of-the-art Multiple Listing Service. Over 37,000 TREB Members serve consumers in the Greater Toronto Area. The Toronto Real Estate Board is Canada’s largest real estate board. www.torontorealestateboard.com

ABOUT FCAC: With educational materials and interactive tools, the Financial Consumer Agency of Canada (FCAC) provides objective information about financial products and services to help Canadians increase their financial knowledge and confidence in managing their personal finances. FCAC informs consumers about their rights and responsibilities when dealing with banks and federally regulated trust, loan and insurance companies. FCAC also makes sure that federally regulated financial institutions, payment card network operators and external complaints bodies comply with legislation and industry commitments intended to protect consumers.

You can reach us through FCAC’s Consumer Services Centre by calling toll-free 1-866-461-3222 (TTY: 613-947-7771 or 1-866-914-6097) or by visiting our website: itpaystoknow.gc.ca.

FOOTNOTES:

1 Survey conducted by Nanos Research and commissioned by The Canadian Real Estate Association. The survey was a random national telephone survey of 1000 Canadians aged 18 and over and is considered accurate ± 3.1%, 19 times out of 20.

2 Question: Do you think Canadians would benefit, somewhat benefit, somewhat not benefit or not benefit from a free toolkit which helped Canadians better understand the financial aspects to buying a home? Responses, all of Canada: Benefit 54.6%; Somewhat benefit 31.6% for a total of 86.2%.

Remarks by Gary Simonsen, CEO of CREA to the House of Commons Standing Committee on Finance

Remarks by Gary Simonsen, CEO of The Canadian Real Estate Association
House of Commons Standing Committee on Finance
Ottawa, Ontario November 19th, 2013

Speaking Notes – Check against delivery.

Good morning and thank you Mr. Chair. On behalf of our over 100,000 REALTOR® members, I would like to thank the committee for the invitation.

Like MPs, our members’ work connects them to the community. And similarly, our goal is to make communities across Canada better, safer and stronger.

Our recommendations carefully consider the fiscal limits of the current economic environment and can be implemented at little or no net cost, while delivering economic spin-off benefits and creating jobs. A balanced and stable real estate market is a crucial pillar of a strong economy. This year, resale housing transactions will generate an estimated $22.3 billion in consumer spin-off spending and create more than 175,000 jobs.

Buying a home is the largest financial decision most Canadians will make in their lives. Increasing their financial understanding about this purchase is a crucial component of long-term housing market stability. This is why we have taken an active interest in financial literacy and collaborated with the Financial Consumer Agency of Canada on the Homebuyers’ Road Map.

One of the most important government measures that supports responsible home ownership is the Home Buyers’ Plan. According to a recent Nanos Research survey, 65.5% of Canadians believe the Home Buyers’ Plan is valuable tool for Canadians interested in buying a home.

The Plan allows homebuyers to borrow up to $25,000 from their RRSP for a down payment. Since its implementation in 1992, the Plan has made homeownership a more affordable reality for over 2.6 million Canadians.

Unfortunately, inflation is slowly eroding the Plan’s purchasing power. A homebuyer today is receiving $1,600 less value from the Plan than a homebuyer in 2009. By 2015, this loss in value will hit almost $2,500. This is why we are asking for the Home Buyers’ Plan withdrawal limit to be indexed in $2,500 increments to the Consumer Price Index. Over time, this will maintain – not increase – the Plan’s buying power.

Importantly, there is no cost associated with this recommendation until 2016, at which time the cost would be $7.5 million.

We also share the view that vulnerable Canadians should be supported with the Home Buyers’ Plan. Allowing its use after job relocation, the death of a spouse, a marital breakdown or to accommodate an elderly family member would help individuals maintain homeownership through significant life changes by easing affordability concerns. This responds to a need we have heard expressed at this table during our last pre-budget consultation appearance and by our members. This proposal meets that need by allowing Canadians to borrow from their own savings rather than depend on government funding.

Finally, to encourage community reinvestment, small investors should be allowed to defer recapture of previously claimed depreciation (technically known as Capital Cost Allowance recapture) on income properties – a benefit similar to one large developers already enjoy.

Allowing this deferral for those who choose to reinvest proceeds of sale into a new building would unleash a chain reaction of economic, environmental and community renewal benefits.

Third-party costing research demonstrates the net cost of this proposal is only $12 million in the first year, and would be net revenue positive in year two, since Capital Gains Tax will be collected on the increased value of any properties using this deferral.

Thank you for your time and consideration.

Canadian home sales fall back in October

Ottawa, ON, November 15, 2013 – According to statistics released today by The Canadian Real Estate Association (CREA), national home sales declined in October 2013.

Highlights:

  • National home sales declined by 3.2% from September to October.
  • Actual (not seasonally adjusted) activity came in 8.3% above levels in October 2012.
  • The number of newly listed homes declined by 0.8% from September to October.
  • The Canadian housing market remains in balanced territory.
  • The national average sale price rose 8.5% on a year-over-year basis in October.
  • The MLS® Home Price Index (HPI) rose 3.5% year-over-year in October.

The number of home sales processed through the MLS® Systems of Canadian real estate Boards and Associations and other co-operative listing systems fell 3.2 per cent on a month-over-month basis in October 2013. The decline returned activity back to near where it stood last June and July.

“October’s lower activity provides early evidence confirming that sales in the later summer and early fall were boosted by homebuyers with pre-approved mortgages at lower than current interest rates jumping into the market before their preapprovals expired,” said Gregory Klump, CREA’s Chief Economist. “Now that interest rates appear to be going nowhere fast, sales activity in the near term may be held in check by homebuyers who are in less of a hurry to purchase. While the Finance Minister will no doubt continue to keep a close eye on Canadian housing markets for signs of overheating as interest rates remain low, October sales results may provide him with reassurance that tightened mortgage regulations and lending guidelines are working as intended.”

Sales were down in a little over half of all local markets, including Greater Vancouver, the Fraser Valley, Greater Toronto, Hamilton-Burlington, and Montreal. The monthly decline in activity among these markets offset increased activity in a handful of less active major urban centres.

chart of interest01 (E)October’s seasonally adjusted sales figure stood slightly above (0.9 per cent) the average for monthly sales over the past 10 years.

Actual (not seasonally adjusted) activity posted an 8.3 per cent year-over-year gain in October. Sales were up on a year-over-year basis in just over half of all local markets, once again led by gains in Greater Vancouver, Calgary, Edmonton, and Greater Toronto.

On an actual (not seasonally adjusted) basis, a total of 402,299 homes have traded hands across the country so far this year. That stands just 0.2 per cent below levels recorded in the first 10 months of 2012.

chart of interest02 (E)Despite considerable monthly sales volatility in recent years, annual sales remain remarkably stable. With just two lower volume months left to go this year, sales for the year-to-date in October stand broadly in line with activity over the same period in each of the past five years and well off the peak reached in 2007.

The number of newly listed homes declined by 0.8 per cent on a month-over-month basis in October, with a fairly even split between the number of markets where new supply fell and the number where it remained stable or increased.

With the monthly decline in sales having outstripped the dip in new listings, the national sales-to-new listings ratio fell to 54.6 per cent in October compared to 55.9 per cent in September. This remains well within balanced market territory, which has been the case since early 2010.

Based on a sales-to-new listings ratio of between 40 to 60 per cent, about two thirds of all local markets were in balanced market territory in October.

“A majority of local markets across the country are still seeing a healthy balance between buyers and sellers coupled with modest price growth,” said CREA President Laura Leyser. “Even so, there are some markets in the Prairies and in parts of southwestern Ontario where competition among buyers has increased, while parts of Quebec and some areas in the Maritimes have been seeing increasing competition among sellers. Because all real estate is local, your REALTOR® remains your best resource for understanding how the housing market is shaping up where you live or might like to.”

The number of months of inventory is another important measure of balance between housing supply and demand. It represents the number of months it would take to completely liquidate current inventories at the current rate of sales activity.

There were 6.0 months of inventory at the national level at the end of October, up from 5.9 months one month earlier, which was the first increase since February. However, as with the sales-to-new listings ratio, the current level for months of inventory indicates that the Canadian housing market remains well balanced.

The actual (not seasonally adjusted) national average price for homes sold in October 2013 was $391,820, an increase of 8.5 per cent from the same month last year. The size of year-over-year average price gains continues to reflect the decline in sales activity last year in some of Canada’s larger and more expensive markets which caused the national average price to drop at that time.

If Greater Toronto, Greater Vancouver, and Calgary are removed from national average price calculations, the year-over-year increase shrinks to 4.9 per cent. The MLS® Home Price Index (MLS® HPI) provides a better gauge of price trends, since it is not affected by changes in the mix of sales activity the way that average price is.

natl_chart_of_interest03_hi-res_enThe Aggregate Composite MLS® HPI rose 3.52 per cent compared to October 2012. Year-over-year price growth picked up among all property types tracked by the index, led by one-storey single family homes (+4.19 per cent). This was followed by two-storey single family homes (+3.88 per cent), townhouse/row units (+3.28 per cent) and apartment units (+2.05 per cent).

Year-over-year price growth in the MLS® HPI was mixed across housing markets tracked by the index, led by Calgary (+8.17 per cent) and Greater Toronto (+4.54 per cent). Although the prices remained below year-ago levels in Greater Vancouver, Victoria, Vancouver Island, and Regina, October marked the smallest year-over-year decline in 2013.

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PLEASE NOTE: The information contained in this news release combines both major market and national sales information from MLS® Systems from the previous month.

CREA cautions that average price information can be useful in establishing trends over time, but does not indicate actual prices in centres comprised of widely divergent neighbourhoods or account for price differential between geographic areas. Statistical information contained in this report includes all housing types.

MLS® Systems are co-operative marketing systems used only by Canada’s real estate Boards to ensure maximum exposure of properties listed for sale.

The Canadian Real Estate Association (CREA) is one of Canada’s largest single-industry trade associations, representing more than 106,000 REALTORS® working through more than 90 real estate Boards and Associations.

Further information can be found at http://crea.ca/statistics.



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