--Sales Continue Strong Toronto, Vancouver; Weak Much Of Rest Of Country
By Courtney Tower
OTTAWA (MNI) - Canadian home resales in February rose by 1.0% from a weak January, a performance skewed by high activity continuing in the large cities of Toronto and Vancouver while the rest of the country saw weaker sales, the Canadian Real Estate Association said Friday.
The sales seasonally adjusted at an annual rate in February, following a -3.1% decline in January, were again led by increases in Greater Vancouver and Greater Toronto.
The impact of lower oil prices and sales was felt in the oil-producing provinces of Alberta and Saskatchewan and prompted CREA to issue a somewhat revised home resales forecast for this year. CREA in a separate document said it sees national sales at 475,700 units in 2015, down by -1.1% on the year, "reflecting downward revisions to the outlook for sales in Alberta."
Greater Vancouver saw seasonally adjusted sales at 3,365 in February, up by + 7.0% from January. Actual sales of 3,108 were up by +20.9% year-over-year. Greater Toronto saw seasonally adjusted sales of 7,931, up 3.8% from January. Actual sales of 6,338 were up by +10.6$ on the year.
By contrast, in the long time former housing hotspot of Calgary, main center of corporate oil and gas industry activity, there was almost no change in sales from January. Actual sales of 1,544 were down 34.7% from February of 2014.
The other main Alberta city, Edmonton, saw actual sales of 1,044 units in February that marked a 16.7% decline year-over-year.
In Saskatchewan there were declines in actual housing sales in February in the two main cities of Saskatoon (298 units for -22.2% Y/Y) and Regina (203 units for -5.1% Y/Y).
CREA said in the country as a whole actual sales activity was +2.7% above February 2014. But in the Prairie Provinces of Alberta, Saskatchewan and Manitoba (Winnipeg, the principal city, down by -3.0% Y/Y) buyers "stayed on the sidelines," according to CREA president Beth Crosbie. "That's likely to remain an important part of the national housing story until the outlook for oil prices starts improving," she said.
Excluding large urban markets in Ontario and British Columbia, sales were below the 10-year average in two-thirds of all local markets, according to CREA chief economist Gregory Klump.
The number of newly listed homes declined by 2.5% in February from January. The sales-to-new-listings ratio rose from 50.4% in January to 52.2%, keeping within the generally accepted range for balanced housing market conditions, CREA said. There were 6.4 months of inventory nationally, down from 6.5 months in January.
The national average home price in February was C$431,813, up by +6.3% year-over-year. That figure remains skewed by Greater Toronto and Greater Vancouver. Excluding them, the average price was C$326,910 or +1.5% year-over-year.
Given both negative and positive developments for their effects on housing activity, CREA updated its forecast for resales.
Consumer confidence in the Prairies has been shaken by the further decline in oil prices, which "has led to a rapid shift in market balance in Alberta and, to a lesser extent, Saskatchewan," CREA said. It saw annual sales well down in those province but small declines in prices.
On the other hand, the weaker Canadian dollar, lower mortgage rates, and stronger United States economy since CREA's last forecast have prompted an upwardly revised forecast for "much of the rest of the country."
CREA forecasts a -1.1% decline in sales nationally for this year, and a 1.7% increase in 2016.
It sees a -19.2% sales decline this year for Alberta and a -11.9% decline for Saskatchewan, but increases in 2016 of 6.6% and 5.1% in 2016.
For British Columbia as a whole, CREA sees a 4.9% increase this year dropping to a 0.9% increase in 2016. For Ontario generally, it sees a 1.9% increase for 2015 and a0.7% increase for 2016.
For Canada as a whole it sees average prices rising by 2.0% this year and by 21.9% in 2016.
Meanwhile, two housing price indexes published on Thursday showed that home price growth continued to slow in February.
The Teranet-National Bank National Compoisite House Price Index for Canada's 11 largest cities rose by 4.4% year-over-year in February, a slight deceleration from the 4.7% increase in January and the fourth consecutive months of slowing home price growth. Month-over-month index sales, both for the overall 11 and for the composite six (Vancouver, Toronto, Calgary, Montreal and Halifax) were up by 0.1%.
The New Housing Price Index of Statistics Canada, which excludes condomiums and apartments and thus excludes about a third of the market, edged down in January by 0.1% from December. The year-over-year growth rate was 1.4%, dropping from +1.7% in January.
Local real estate boards also presented a regional divide in activity in housing, along the lines of the CREA report.
Calgary sales were down by -34% year-over year and Edmonton down by 17%. The Greater Vancouver Real Estate Board reported 3,061 home sales in February, up by 21% year-over-year and up by 60% from January. And the Real Estate Board for the Greater Toronto Area (GTA) reported that 1,338 sales in February marked an 11.3% increase year-over-year with large increases across all home types.
Meanwhile, other data released Thursday showed that household debt has risen to a record height. Household debt, about two-thirds for mortgages but also for credit cards and non-mortgage loans, grew to 163.3% in the fourth quarter last year from a revised 162.7% in the third quarter.
The debt increase, based largely on the cheapest mortgages in decades and a tolerable jobless rate, saw consumers load up on debt. However, rising home prices and the depreciation of the Canadian dollar combined to increase national net worth by 2.6% over the previous quarter on an annual basis, and by 7% year-over-year. Household assets, in effect, grew faster than did debt.
According to Diana Petramala of TD Economics, Canadian households still are "in a good position to keep up with their debt payments." Interest payments as a share of overall income remained "near historically low levels." Only 0.28% of mortgages were in arrears 90 days or more last October, she said, and credit card delinquency rates are "at record low levels."
--MNI Ottawa Bureau; tel: +1 613-853-9648; email: yndiaye@mni-news.com