23 Mar

September Data Confirm That Housing Is in Full Rebound


Posted by: Alisa Aragon-Lloyd

Statistics released today by the Canadian Real Estate Association (CREA) show that national home sales rose for the seventh consecutive month. Activity rose another 0.6% month-over-month in September to 512,000 units (seasonally-adjusted and annualized). This was the highest level in 21 months and 6.6% above the 10-year average shown in the chart below. Existing home sales were 18% above the six-year low posted in February 2019, but they remain 8% below highs reached in 2016 and 2017.

Activity accelerated in slightly more than half of all local markets, led by Greater Vancouver (GVA) and the Fraser Valley, which together constitute the Lower Mainland of British Columbia.

Actual (not seasonally adjusted) sales activity was up 15.5% year-over-year, reflecting the combination of slow sales in September 2018 and a rebound in activity this year. Transactions were up from year-ago levels in all of Canada’s largest urban markets, including the Lower Mainland of British Columbia, Calgary, Edmonton, Winnipeg, the Greater Toronto Area (GTA), Hamilton-Burlington, Ottawa and Montreal.

New Listings
The number of newly listed homes rose by 0.6% last month compared to 1.1% in August. The small increase in sales combined with the modest decline in new supply tightened the national sales-to-new listings ratio to 61.3% in September. This measure has been increasingly rising above its long-term average of 53.6%. At this point, this measure remains in balanced market territory but is favouring sellers more than buyers.

Based on a comparison of the sales-to-new listings ratio with the long-term average, three-quarters of all local markets were in balanced market territory in September 2019, including the GTA and Lower Mainland of British Columbia. Of the remainder, the ratio was in sellers market territory in all housing markets except Saskatoon and Southeast Saskatchewan.

There were 4.5 months of inventory on a national basis at the end of September 2019 – the lowest level recorded since December 2017. This measure of market balance has been increasingly retreating below its long-term average of 5.3 months.

This is not to say that things are solid across the board. Small month-over-month (m-o-m) resales declines in Calgary and Edmonton in September are a reminder that the recovery remains tentative in several markets where the economy is soft. Home prices are still down from a year ago in Alberta and Saskatchewan, and it will take a little longer for any recovery in demand to firm up pricing in those areas.

Home Prices
The Aggregate Composite MLS® Home Price Index (MLS® HPI) rose 0.5% m-o-m in September 2019, marking a fourth consecutive gain for the measure.

Seasonally adjusted MLS® HPI readings in September were up from the previous month in 13 of the 18 markets tracked by the index. (Table 1)

In recent months, home prices have generally been stabilizing in the Lower Mainland and the Prairies, where previously they were falling. Meanwhile, price growth has begun to rebound among markets in the Greater Golden Horseshoe (GGH), rejoining the ongoing price gains in housing markets located further east.

Comparing home prices to year-ago levels yields considerable variations across the country, with mostly declines in western Canada and mostly price gains in eastern Canada.

Home prices in Greater Vancouver and the Fraser Valley remain furthest below year-ago levels (-7.3% and -4.8%, respectively), although declines are becoming smaller. Elsewhere in British Columbia, home prices on Vancouver Island and in the Okanagan Valley logged y-o-y increases (4% and 1.1%, respectively) while they edged slightly higher in Victoria (+0.4% y-o-y).

Prairie markets posted price declines ranging from about 1% to around 4% on a y-o-y basis in September. Over the same period, y-o-y price growth has re-accelerated well ahead of overall consumer price inflation across most of the GGH. Meanwhile, price growth in recent years has continued uninterrupted in Ottawa, Montreal and Moncton.

All benchmark home categories tracked by the index returned to positive y-o-y territory in August 2019 and gains further increased in September. Two-storey single-family home prices were up most, rising 1.7% y-o-y. One-storey single-family home prices rose 1.4% y-o-y, while townhouse/row and apartment units edged up 0.4% and 0.7%, respectively.

Bottom Line

This report is in line with other recent indicators that suggest housing has recovered from a slump earlier, helped by falling mortgage rates. The run of robust housing data gives the Bank of Canada another reason– along with healthy job gains, higher wage rates and stronger than expected output growth in Q2 — to hold interest rates steady.

As a result of some apparent easing in trade tensions between the US and China, interest rates have risen sharply over the past month. The Government of Canada bond yield is now 1.57% compared to 1.42% a month ago. Mortgage rates have edged up as well. The federal election is a wild card. Promises made during the federal election campaign could heat things further. Proposed measures include an expansion of the first-time homebuyer incentive; an extension of the maximum amortization period for insured mortgages; an easing the mortgage stress test; and, an increase in the homebuyer tax credit. Such measures could ultimately boost demand at a time when supply is tight overall. We’ll be awaiting details and the timing of any housing-related announcements by the next government to gauge the full impact on the market.

Dr. Sherry Cooper
Chief Economist, Dominion Lending Centres

15 Mar

Market Update


Posted by: Alisa Aragon-Lloyd

The Bank of Canada acknowledged that a couple  weeks ago that the slowdown in the Canadian economy has been deeper and more broadly based than it had expected earlier this year. The Bank had forecast weak exports and investment in the energy sector and a decline in consumer spending in the oil-producing provinces in January. In addition, the global economy has slowed more than expected.

Consumer spending and the housing market have been soft despite strong job growth. We are certainly experiencing a buyers housing market. It is important to remember that during this time if you are looking at selling your property, you will be selling a bit lower than 6 months ago however, you will be buying low too.

Based on the Bank of Canada remarks, we are left to assume that the Bank is unlikely to hike interest rates again this year. This will affect anyone with variable rate mortgages, home equity lines of credit (HELOC), and lines of credit. Fixed mortgage interest rates went up slightly and have now moved back down a little with quite a few lenders. Fixed interest rates are still relatively low compared to what interest rates were back in 2005 (5.35% for 5 years).

In addition, I would like to mention the importance of maintain a good credit report. The lenders are not just focusing on your credit score, they are also analyzing the report for any late payments and reasons for it. There is a lot more due diligence being done on their part, and more than ever your credit score will have an impact on the interest rate you get. Lenders consider a credit score of 680 or higher a good score. However, life happens and there are reasons for late payments at times. We can help you by having access to different lenders, so if you think there is an issue with your credit be rest assured that you will still be able to get financing. If you want more information on credit, please let me know.

Handy tip: Even though interest rates have moved up, it might still be worth it to look at refinancing    to pay credit card debt, improve your cash flow or look at refinancing to purchase an investment property.

Here is an example of a client that refinanced and improved their cash flow dramatically:

Source: For illustration purposed only, E&O exempt, the mortgage was rounded up to include estimated pre-payment penalty, legal fees and appraisal. Final approval will be given once an application, credit report and final approval has been given by the lender. *Refers to interest only payments and no principal is paid down.

Even though their mortgage interest rate is higher than what they originally had, by consolidating their debts, our clients were able to improve their monthly cash flow by approximately $545.09 per month, saving hundreds of dollars on higher credit card interest rate. Now, they are paying down their debt, instead of just making interest only payments. In addition, with the extra funds they have started saving money on a monthly basis.

With the constant changes in mortgage guidelines it can be confusing: how the changes can impact your ability to qualify for, what value of home you can purchase, or if you are able to refinance. It is critical now more than ever, buyers and homeowners need an expert that can lead you through the maze and provide you with advice and options, so you can be confident that you are making the right decision and I am delighted to help!

Contact me: http://bit.ly/2VcSnXC

Alisa Aragon, Financing Expert,