Information Watch | September, 2012 |
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Canadian home sales down in August Ottawa, ON, September 17, 2012 – According to statistics released today by The Canadian Real Estate Association (CREA), national resale housing activity dropped sharply from July to August 2012. Highlights: - Home sales down 5.8% from July to August.
- Actual (not seasonally adjusted) activity stood 8.9% below levels in August 2011.
- Number of newly listed homes down 1.7% from July to August.
- Housing market remains firmly in balanced territory at the national level.
- National average home price up 0.3% on a year-over-year basis in August.
- The Composite Aggregate Benchmark home price was up 4% in August, its smallest gain in over a year.
The number of home sales processed through the MLS® Systems of real estate Boards and Associations in Canada fell 5.8 per cent between July and August 2012, marking the largest month-over-month decline since June 2010. Declines were reported in about two-thirds of all local markets representing 80 per cent of national activity, with monthly sales declines in almost all large urban centres, including Greater Toronto, Greater Montreal, Greater Vancouver, the Fraser Valley, Calgary, Edmonton, and Ottawa. (Chart A) 
Actual (not seasonally adjusted) activity was down 8.9 per cent in August 2012 compared to the same month last year. This was the biggest year-over-year drop since April 2011. “While we always caution that housing market trends at the national level can and do run counter to trends in many local markets, the decline in activity in August was definitely the result of much of the country moving in the same direction,” said CREA President Wayne Moen. “That said, many smaller and more affordable markets bucked the national trend. As always, all real estate is local, so buyers and sellers should speak to their REALTOR® to understand how the housing market is shaping up where they live.” “August’s sales figures will no doubt provide comfort to policymakers, providing the first clear indication that the recent changes to mortgage regulations aimed at cooling the market are working as intended,” said Gregory Klump, CREA’s Chief Economist. “With previous changes to mortgage regulations, demand rose between the time changes were announced and their implementation, and invariably fell in the months immediately after being implemented, before recovering to long-term levels. By contrast, recent changes to mortgage regulations were in force more quickly after being announced, so home buyers had far less time to react. As a result, demand didn’t pick up just before the changes took effect, while sales declined once they did.” A total of 334,208 homes have traded hands over Canadian MLS® Systems so far this year. This represents a 2.8 per cent increase compared to levels reported over the first eight months of 2011, and a narrowing of the 4.5 per cent lead for year-to-date sales activity in July. The number of newly listed homes fell 1.7 per cent in August compared to July. New supply was down in just over half of all local markets in August, but the 7.7 per cent month-over-month decrease in Greater Toronto by far contributed most to the national decline. With the decline in sales activity outstripping the decrease in new listings, the national housing market was more balanced in August than it had been at any other point in the past two years. The national sales-to-new listings ratio, a measure of market balance, stood at 51 per cent in August 2012, down from 53.1 per cent in July. 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 August. Another measure of market balance, the national number of months of inventory, stood at 6.5 months at the end of August. This was up from 6.1 months at the end of July, as the measure rose in between July and August in almost two-thirds of all local markets. The number of months of inventory represents the number of months it would take to sell current inventories at the current rate of sales activity, and is a further measure of the balance between housing supply and demand. “The broadly based decline in August sales activity suggests that some buyers may no longer qualify for a mortgage now that amortization periods for high ratio mortgages have been shortened,” said Klump. “As the lynchpin of the housing market, lower first-time buying activity will have downstream effects over the rest of the market. While we expect it will likely take more time for move-up buyers to sell their current home, a few more months of data are needed to gauge the broader impact of recent regulatory changes on Canada’s housing market.” The actual (not seasonally adjusted) national average price for homes sold in August 2012 was $350,192, up three-tenths of one per cent from the same month last year. The national average price continues to be influenced by compositional factors, most notably by fewer sales in Vancouver this year compared to much stronger levels last year. The result has been a downwardly skewed national average price this year compared to an upwardly skewed average selling price last year. By way of example, excluding just Greater Vancouver from the national average price calculation yields a year-over-year increase of 3.3 per cent, reflecting the fact that average sale prices were actually up year-on-year in three-quarters of all local markets in August. Unlike average price, the MLS® Home Price Index (MLS® HPI) is not affected by changes in the mix of sales, providing the best gauge of Canadian home price trends. The index tracks home price trends in five of Canada’s most active housing markets, including Greater Vancouver, the Fraser Valley, Calgary, Greater Toronto, and Montreal. These five markets comprise approximately 45 per cent of all home sales activity in Canada. The MLS® HPI rose four per cent on a year-over-year basis in August 2012. This was the fourth time in as many months that the year-over-year gain shrank, and marks the slowest rate of increase in over a year. Year-over-year price growth held steady at 5.6 per cent in August for one-storey single family homes while moderating to 5.2 per cent in the two-storey single family Benchmark housing category. Prices for townhouse and apartment units continue to see more modest gains, rising 1.7 per cent and 1.8 per cent respectively on a year-over-year basis in August 2012. These were also smaller gains than were seen in July. The MLS® HPI posted the largest year-over-year increase in Calgary (6.5%), followed by Greater Toronto (6.3%), the Fraser Valley (2.5%), and Montreal (2.2%). In Greater Vancouver, the MLS® HPI posted its first albeit marginal year-over-year decline (-0.5%) in almost three years. CREA Updates Resale Housing Forecast 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 2012 and 2013. Since CREA’s last resale housing forecast, mortgage regulations were tightened further, activity in Ontario softened, and the slowdown of sales activity in British Columbia deepened. As a result of these developments, CREA has lowered its forecast for Canadian home sales this year and next. The national average price forecast has also been reduced, reflecting an expected decrease in Ontario’s and British Columbia’s provincial sales as a proportion of national activity. British Columbia’s share of national sales has declined further below its long term average. Ontario’s share of national sales has also retreated from elevated levels, and is expected to hold near its long run average. National resale housing activity is now forecast to rise by 1.9 per cent to 466,900 units in 2012. Alberta is still expected to post the biggest increase in activity, offsetting a sales decline in British Columbia. In 2013, CREA forecasts that national sales activity will recede by 1.9 per cent to 457,800 units. This is a larger decline than was previously forecast, reflecting the cumulative effects of previous and recent changes to mortgage regulations, and anticipated interest rate increases in the second half of 2013. Activity is expected to ease in all provinces except Alberta and Manitoba, with Ontario registering the largest decline. 
Although revised downward, national sales in 2012 and 2013 are forecast to remain roughly on par with the 10 year average, with 2012 coming in slightly above and 2013 slightly below average. “All real estate is local, so housing market prospects can and do differ among regions and communities,” said Wayne Moen, CREA President. “For that reason, buyers and sellers should talk to their REALTOR® about the housing market outlook where they live.” The national average home price is forecast to rise by just 0.6 per cent to $365,000 in 2012, reflecting a strong start to the year for sales and average price in Ontario but fewer expensive home sales in British Columbia. The national average price is expected to edge lower by one tenth of one per cent to $364,500 in 2013, with Ontario and British Columbia registering small price declines amid modest average price gains in other provinces. “Recent changes to mortgage regulations are likely to sideline some potential first-time home buyers, particularly in some of Canada’s priciest housing markets,” said Gregory Klump, CREA’s Chief Economist. “That’s likely to result in slower momentum for resale housing activity, with an increase in the amount of time it takes for move-up buyers to sell their current home. Job growth is widely expected to continue at a modest pace while interest rates remain on hold, so the economic outlook is absent the factors that typically result in forced sales and a dramatic swing in prices.” 
Risk of Canadian housing bubble easing, Fitch says Risks of a bubble in Canada’s housing market appear to be easing, a “positive development” for the country’s banks, the Fitch ratings agency said today. “In Fitch Ratings’ view, these early signs of a cool-down in the housing market could be generally positive for the stability of the Canadian banking system and the sustainability of economic growth, though the full extent and pace of the housing correction remains unclear,” the agency said. Fitch cited the most recent report by the Canadian Real Estate Association, which said this week that home sales fell 5.8 per cent in August from July. New federal mortgage restrictions that went into effect in July are believed to have played a role in taming Canada’s real estate market, though consumer debt burdens remain the biggest threat for the banks, Fitch said. “The latest sales numbers provide some initial evidence that risks of near-term overheating in the Canadian housing market may be subsiding,” the agency added. “This could be a positive development for Canadian financial institutions as long as the labour market remains relatively stable.” The reduced threat of a bubble will also probably take some pressure off the Bank of Canada to hike interest rates any time soon, the agency added. Home and Garden >> 6 Must-Do Fall Maintenance Tasks Fall is almost here. That means beautiful trees, pumpkins, and that unmistakable smell that signals the end of summer and the soon-to-be winter months. Fall also means getting your home and car ready for the onslaught of winter. For those that live in the extreme southern portions of the country, winter might not be much different than other months. For people in most states, winter means snow and freezing, and that can cause expensive problems if people don't take the time and effort to get prepared during the fall months. Here are a few basic tasks to complete before the first snowfall. Gutters
Once the leaves fall, do a final cleaning of your gutters and downspouts. Clogged gutters makes runoff from snow freeze within the gutters. This is especially true for older gutter systems, and it may lead to the gutters separating from your roof. This not only causes damage to your gutters, but also to the underlying structure of the roof that holds the gutter. If you don't like cleaning out your gutters, invest in gutter guards. Energy Audit
Do you know where your heat and air conditioning is escaping? An energy audit is the way to find out. Although you can pay private contractors to perform the audit, your gas or electric company might send somebody to your home free of charge. Depending on the age of your home, sealing areas where the heat or air conditioning is escaping can result in substantial savings over time. Even the smallest leaks add up over time. You can also do this yourself by examining for cracks in doors and windows and looking for any areas where you can see daylight coming through. The audit will check other areas like electrical and cable outlets on outside walls. Your Trees
Have your trees trimmed every few years to assure that accumulated ice doesn't cause a dead branch to fall on to your roof. Once the leaves fall and you can see the branches of your trees, look for any larger-sized branches that appear dead and would fall onto yours or your neighbor's roof. If you knew the limb was dead and it damaged a neighbor's home, your homeowners insurance may not cover the damages. Your Car
Winter is the last time of the year you'd want to be stranded by your car, which is why it's so important that you prepare your vehicle for the demanding weather. Later in the fall, replace your windshield wiper blades, use washer fluid designed for winter use and have a bottle of de-icer in your car to avoid having to scrape. Also check your tires to make sure they have enough tread. If you notice any weird engine sounds, have those fixed before the cold weather hits. Often small problems become bigger once the winter months arrive. Your Generator
If you live in an area with extreme weather or have medical or other essential devices that require electricity, investing in a generator might be wise. If you have one, test it, along with your snowblower. Also check extension cords for signs of wear. Repair or replace them if required. The Bottom Line
Very few people enjoy the maintenance that comes with owning a home or car, but even less enjoyable is the bill that comes with repairing something because regular maintenance wasn't performed. If you start early, many of these jobs can be spaced out over the next couple of months. RE/MAX Sells More Real Estate! 
| Mary Spudic
Sales Representative
905-855-2200
Fax: 905-855-2201
mary.remax@cogeco.ca | 
| RE/MAX Realty Enterprises Inc., Brokerage - Mississauga, Ontario
Independently Owned and Operated |
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