An uptick in national home sales in January has broken the four-month trend of declining activity, though the market remains subdued from a long-term perspective.
Sales rose 3.6% between December and January but are 4% below 2018 levels and the 10-year average for the month, which was the weakest recorded since 2015.
That’s had a downward pull on the national average home price, which fell 5.5% to $455,000 ($360,000 without the Greater Toronto Area and Greater Vancouver factored in). The national Home Price Index, which measures the value of homes trading hands, rose 0.8%, the smallest increase since last June.
Meanwhile, supply gluts forming in the Vancouver and Hamilton-Burlington markets have pushed the national level of inventory higher by 1%.
Impact of the Stress Test to Blame for Weaker Sales and Prices
Barb Sukkau, CREA’s president, says that weaker conditions are due to the fact that “home buyers are still adapting to tightened mortgage regulations brought in last year”, but the effects are unbalanced across the country; sales remain below the 10-year average in British Columbia, Alberta, Manitoba, Ontario, and Newfoundland and Labrador.
Stated CREA’s Chief Economist Gregory Klump, “Sales, market balance, and home price trends are out of synch among major Canadian cities that have the greatest impact on national results. It’s clear that housing market conditions remain weaker in the Prairie region and the Lower Mainland of British Columbia. Notwithstanding the intended consequences, tighter mortgage regulations that took effect in 2018 combined with previous tightening will weigh on economic growth this year.”
National Market Remains Balanced
However, the modest short-term uptick in sales was enough to outpace new supply, pushing buying conditions into more competitive territory with a national sales-to-new-listings ratio of 56.7% – still balanced, but approaching a sellers’ market. More than half of all markets remain in balanced territory with 5.3 months of inventory, which is in line with the long term average.
However, CREA points out that the amount of inventory swings wildly across the country with some much higher than usual (Prairies, Newfoundland and Labrador), and others well below typical levels (Ontario and Prince Edward Island).
Price Growth by Home Type
As has been the long-term trend, apartments saw the largest year-over-year price increase in January, with the average unit value up 3.3%. That’s followed by modest gains in the townhouse segment (+1.5%), while single-family home prices remain flat; two-storey homes rose just 0.1%, while one-storey fell 1.1%.
Home Prices Across Canada
“Trends continue to vary widely among the 17 housing markets tracked by the MLS HPI,” stated CREA in its release, as price growth across the nation remains a tale of many markets.
British Columbia:Greater Vancouver and the Fraser Valley continue to see prices soften, down 4.5% and 0.8%, respectively. However, values continue to rise in Victoria (+4.2%) and elsewhere on Vancouver Island (+9.5%).
Ontario:Prices are up across the majority of the GGH, rising 7.2% for Guelph real estate, 7% in Niagara Region, 5% in Hamilton-Burlington, 3.9% in Oakville-Milton, and 2.7% in the GTA. The Barrie real estate market was the only one to see a decline of -2.7%.
Ottawa also continues to enjoy robust price growth, up 7%, and fueled by a 9.5% uptick in townhouses and row units.
Prairies:Home prices in mid- and western Canada continue to fall amid lower demand and a surplus of supply. Calgary fell -3.9%, Edmonton by -2.9%, Regina by -3.8%, and Saskatoon by -2%. “The home pricing environment will likely remain weak in these cities until elevated supply is reduced,” said CREA.
Eastern Canada:Greater Montreal prices also remain on an upward trajectory, rising 6.3% overall, and the townhouses / row segment enjoying a 9.2% boost. Greater Moncton prices rose 1%, with 15% growth also seen in townhouses.
