--Canada Housing Market 'More Balanced'
By Courtney Tower
OTTAWA (MNI) - Canadian home resales in December fell by 5.8% from November and the Canadian Real Estate Association (CREA) said Thursday there had been "a broadly based cooling off for Canadian home sales as 2014 came to an end."
CREA said December sales were down from November in almost two-thirds of all local markets, seasonally adjusted at an annual rate. They were led by declines of about 25% per cent in both Calgary and Edmonton, the big centers of oil activity in Canada.
Activity also slipped by about 5% in the Greater Toronto Area, one of the three big-city hot markets over recent months and years - Toronto, Calgary, Vancouver. In Vancouver, there was a slight monthly gain of 0.2% from November in the MLS Price Index, but a gain of 5.8% Y/Y.
Overall and on a year-over-year basis, actual activity (not seasonally adjusted) was 7.9% above the sales in December last year.
CREA chief economist Gregory Klump said in the association's news release that "December sales were down from the previous month in a number of Canada's largest and most active housing markets, indicating a broadly based cooling off for Canadian home sales as 2014 came to an end."
"Given the uncertain outlook for oil prices, it's no surprise consumer confidence in Alberta softened and moved some home buyers to the sidelines," Klump added.
The Calgary and Edmonton sales had been running strongly all year and then slumped on the effects of the plunge in oil prices and softening of oil industry activity. Still, Klump said, the monthly sales levels "are entirely average for the month of December."
Sales for December were up from year-ago levels in about two-thirds of all local markets, led by Greater Vancouver and the Fraser Valley, the Greater Toronto Area, and Montreal.
CREA said that for the year some 481,162 homes traded hands on an actual (not seasonally adjusted) basis in 2014 - the highest annual level in seven years. Annual sales activity in 2014 was up by +5.1% from 2013 and up by +2.6% over the 10-year annual average.
Newly listed homes rose by 1.1% on the month, led by Calgary on the effects of the oil downturn and in Regina and Ottawa.
In just over half of all local markets, new listings were up. The national sales-to-new listings ratio was 51.8% in December, down from the mid-55 per cent range in the previous four months.
The number of months of inventory, another important measure of the balance between housing supply and demand, was listed at 6.2 months nationally at the end of December, having risen from 5.8 months in November.
"Together with the softer reading for the sales-to-new listings ratio, this suggests that the Canadian housing market has become more balanced," CREA said.
Monthly price gains held steady at between +5.0% and +5.5% throughout 2014, CREA said. "As in recent months, Calgary (+8.8%), Greater Toronto (+7.9%), and Greater Vancouver (+5.8%) continued to post the biggest year-over-year increases," CREA said. Prices otherwise tended to be up by between 2.2% and 2.6% in many markets but up by less than +1.0% in Saskatoon, Ottawa, Greater Montreal, and Greater Moncton, New Brunswick.
The actual (not seasonally adjusted) national average price for homes sold in December was C$405,233, up by 3.8% year-over-year and the smallest increase since May, 2013.
The national average home price remains skewed by sales activity in Greater Vancouver and Greater Toronto. Excluding these two markets, the average price is C$319,481 and the year-over-year increase shrinks to 1.9%, CREA said.
The CREA data comes at a time of other reports of lower home prices nationally for December, of new home starts falling to a nine-month low, and of building permits declining.
Home resale prices fell nationally in December from November, their second straight monthly decline, according to the Teranet-National Bank Composite House Price Index published Wednesday. National home prices fell by 0.2% in December from November. They edged downward in two of the three hot big-city markets, Calgary and Vancouver (-1.1% and -0.4% respectively) and edged upwards on the month in Toronto (+0.3%).
However, year-over-year, nine of the 11 cities covered by the Teranet index showed price gains in 2014: +8.3% in Calgary, +7.2% in Toronto, +5.0% in Vancouver.
New home starts in December fell to a nine-month low of 180,560 units from 193,199 in November, well below market expectations. For the full year, however, starts of 189,401 units were virtually unchanged from 187,923 in 2013, the Central Mortgage And Housing Corporation reported January 9.
Residential building permits issued by municipalities in November were reported by Statistics Canada on Jan. 9 to have decreased by -3.1% after having edged up by +0.3% in October. Construction intentions were down by -3.5% for multiple dwellings and by -2.7% for single family homes.
Additionally, the real estate boards of what have for long been the three highest activity and highest prices market in Canada - Toronto, Vancouver and Calgary - show mixed reports.
The Toronto Real Estate Board reported for the Greater Toronto area that there were 4,446 sales in December. These were far down from 6,519 in November, which had been down by 23.7% from October. Nevertheless, Board President Paul Etherington said that for the year there had been a 6.7% increase to 92,867 units from 87,049 in 2013.
The Calgary Real Estate Board reported a 7.5% decline in home resales in December from November, in both single family houses and in condominiums. In the financial capital for the Canadian oil industry, where prices have plummeted, Board Chief Economist Ann-Marie Lurie expected cooler housing market conditions in 2015.
The Real Estate Board of Greater Vancouver reported sales of 2,116 residential properties in December, down 15.9% from the November sales of 2,516 homes. Year-over-year, home resales of 33,116 were up by +16.1% from 2013, the Board reported.
The credit rating agency Fitch Ratings said Wednesday that it belies the housing market remains 20% over-valued but that despite downside risks from falling oil prices and pockets of over-building, a generally strong quality of mortgage products and high borrower equity levels "means that risk exposure is limited in the market." Although it sees housing prices 20% overvalued now, it expects prices to rise by +2.5% in 2015 following an estimated 5.0% increase in 2014.
--MNI Ottawa Bureau; tel: +1 613-853-9648; email: yndiaye@mni-news.com