New figures that show listings were down and sales were up in the GTA so far in April continue to drive the conversation around the need to balance supply and demand in this hot market.
The Toronto Real Estate Board reported 4,635 home sales during the first 14 days of April, which represents a 3.4 per cent increase compared to April 2014. However, new listings over the same period were down by 4.6 per cent year-over-year.
“Home sales in the GTA continued to increase in comparison to 2014 as a diversity of buyers took advantage of affordable home-ownership options,” said TREB president Paul Etherington.
“However, in many neighbourhoods, listings remain scarce, particularly for ground-oriented home types like singles, semis and towns.
“Given the amount of pent-up demand in the market today, sales growth would accelerate further if more homes were listed for sale.”
The average selling price for April mid-month home sales was $625,121, up seven per cent in comparison to the same time frame in 2014. Average prices were up for all major home types, both in the City of Toronto and the surrounding regions.
“We are experiencing balanced to seller's market conditions in most areas and market segments in the GTA,” added Jason Mercer, TREB’s director of market analysis.
“This suggests that home ownership demand is being driven by a wide swath of the population. On one hand, strong growth in condo listings has been met with strong growth in condo sales.
“On the other hand, we have also experienced growth in higher-end home sales.”
Soft Landing Underway in Most Canadian Real Estate Markets
TORONTO, April 15, 2015 – As the 2015 spring market gets underway, Canada’s real estate market is experiencing a soft landing, characterized by slower than normal home price increases. Much higher price increases were observed in the country’s two largest urban markets, which combined to send the national average values upwards, partially obscuring the broader national trend.
According to the Royal LePage House Price Survey released today, the average price of a home in Canada rose between 3.8 per cent and 6.6 per cent year-over-year in the first quarter. When broken out by housing type, the survey showed a year-over-year average price increase of 5.3 per cent to $451,463 for standard two-storey homes, while detached bungalows rose 6.6 per cent to $405,895. During the same period, the average price of standard condominiums climbed 3.8 per cent to $261,782.
The steady softening of prices in most markets across the country was first observed in the mid-year 2014 Royal LePage House Price Survey. In recent months, two unanticipated factors disrupted the natural housing price cycle: the steep decline in oil prices late in 2014 and the Bank of Canada’s subsequent reaction in lowering the overnight rate early in 2015.
“Canadian home buyers, with the last decade’s recession still top of mind, have been very sensitive to shifting, broad economic factors. The oil shock has been unsettling for the national economy, consumer confidence and by extension, the housing market,” said Phil Soper, president and chief executive, Royal LePage. “That said, lower prices at the pump and the confidence boosting move by the central bank to lower interest rates have been supportive. With these factors combined, we have a soft-landing for housing after several years of robust expansion. We define a soft-landing as a market in which home prices are flat or increasing slightly, giving the economy and family incomes, a chance to catch up.”
“On balance, we believe we will not be seeing the kind of appreciation observed over the last three years any time soon, as markets work through the current cycle and align with broader economic conditions,” continued Soper. “In terms of downside risk, we do not foresee a sharp decline in home prices, particularly in today’s low interest rate environment.”
Shifting consumer confidence was a mixed bag during the first quarter. In February, the Conference Board of Canada’s Index of Consumer Confidence showed weakening support for major purchase decisions, in the aftermath of major retailer closings, among other factors. The Bloomberg/Nanos Research Canadian Confidence Index trended higher late in the quarter, on improved job security and personal finances sentiment. Without clear strength or weakness, this neutral confidence data reveals a more cautious real estate consumer and tempered demand in most regions of the country.
South of the border, Canada’s largest trading partner began 2015 on the strength of the best year for employment growth since 1999. The probability of rising interest rates, and a commensurate drag on the housing market, became a reality as U.S. policy makers debated the need to temper inflationary forces in the wake of the expansion of the American workforce. Then late in the quarter, the U.S. Bureau of Labor Statistics reported that the pace of the expansion had slowed considerably, with employment growth failing to meet expectations.
“While Canadian monetary policy is independent of our southern neighbour’s, interest rates in both countries are highly correlated,” said Soper. “The slower pace of American growth we witnessed in March will indirectly support our housing market here, as the risk of a near-term rise in mortgage rates has been reduced considerably.”
Ongoing economic turmoil in Calgary has pushed the city out of the top three fastest appreciating housing markets into a more moderate zone of below national average price increases. During the same period, Regina posted year-over-year price declines in the detached home category, while Saskatoon remained relatively flat. Meanwhile Toronto and Vancouver both posted at or near double-digit year-over-year price increases across all housing types surveyed, with Greater Toronto Area cousin Hamilton posting comparable gains.
“Supply shortages in key parts of the Greater Toronto Area and Vancouver are driving up local prices in an intensified fashion, but these are the exception, not the rule. The rest of the country is experiencing a much more subdued residential real estate climate. Even a closer look at surrounding areas of Vancouver reveals that mountain-steep appreciation rates are not a B.C.-wide phenomenon,” added Soper.
“What’s essential to note is that Canada is a market of markets, each responding to a combination of local and national factors, where there are even notable differences in market activity between housing types and segments within the same vicinity. In particular, we will be keeping a close eye on the luxury segment, where in Toronto and Vancouver demand is among the highest on record, while dropping to a standstill in Calgary – one of the most dramatic contrasts we have seen between cities that for the last year have been on a parallel trajectory,” concluded Soper.
Regional Market Summaries
Halifax saw a price appreciation in all housing types in the first quarter of 2015. Standard condominiums increased 5.0 per cent year-over-year to $230,000, continuing the trend seen at the end of last year. Standard two-storey homes jumped by 2.7 per cent to $334,667 and detached bungalows increased modestly by 0.7 per cent to $297,667.
A broad selection of available inventory has led to a mild buyers’ market in St. John’s heading into the spring real estate market. The average price for a standard two-storey home increased by 1.8 per cent year-over-year to $407,667. Standard condominiums rose 1.7 per cent to $320,833 and detached bungalows gained 1.4 per cent to $300,100.
Montreal saw a relatively flat market in the first quarter of 2015, with the average price of detached bungalows increasing 0.7 per cent year-over-year to $296,546. The price of standard condominiums rose slightly with a 1.3 per cent increase to $242,778, while standard two-storey homes saw a decrease of 1.5 per cent to $399,964.
A delayed start in the Ottawa housing market led to a relatively flat first three months of the year, although quality listings continue to find buyers. The average price for standard two-storey homes and detached bungalows increased 2.0 per cent and 1.9 per cent year-over-year to $407,000 and $404,167, respectively. Standard condominiums also saw a modest increase in average prices, rising 1.4 per cent to $262,167.
Toronto bucked the national trend of moderating price appreciation due to high demand and a continued lack of inventory. The average price for detached bungalows jumped 10.2 per cent year-over-year to $655,669, which was followed closely by standard two-storey homes, which were up 9.2 per cent to $803,794. Standard condominiums also experienced strong price growth during the quarter, increasing 7.0 per cent to an average price of $395,584.
An upswing in inventory resulted in varied levels of activity across the Winnipeg housing market where the average price for standard two-storey homes saw a strong year-over-year increase rising 5.5 per cent to $342,880. Meanwhile, detached bungalows and standard condominiums both fell on a year-over-year basis, dropping 0.6 per cent to $304,534 and 5.0 per cent to $195,905, respectively.
The Regina housing market turned in the favour of buyers due to a continued imbalance between demand and supply as the average price for single-family homes depreciated in the first quarter, with detached bungalows dropping 5.4 per cent year-over-year to $306,500 and standard two-storey homes declining 1.8 per cent to $349,500. Standard condominiums meanwhile remained relatively flat, increasing 0.7 per cent to $216,500 over the same period.
The Calgary housing market slowed visibly in the first quarter as low oil prices significantly curtailed activity. As a result, price appreciation seen during the quarter was far milder than the significant year-over-year price increases experienced throughout 2014. The average price for detached bungalows increased 3.8 per cent to $498,400, while standard two-storey homes increased 1.7 per cent to $480,656. Standard condominiums recorded moderate growth of 2.9 per cent to $286,913.
Edmonton’s residential real estate market was impacted by the drop in oil prices, as uncertainty stopped many would-be buyers and sellers from entering the market. While fewer homes traded hands, the three major housing categories saw average prices increase on a year-over-year basis, with detached bungalows showing the strongest gain of 6.8 per cent to $364,906. Over the same period standard two-storey homes rose 5.5 per cent to $391,378 and standard condominiums gained 3.1 per cent to $231,093.
Ongoing high demand combined with a healthy supply led to an increase in first quarter activity in Canada’s most expensive real estate market. The average price for detached bungalows and standard two-storey homes in Vancouver both saw double digit year-over-year growth, soaring 10.6 per cent to $1,174,509 and 10.3 per cent to $1,267,287, respectively. Over the same timeframe, standard condominiums saw more moderate price appreciation, jumping 4.9 per cent to an average price of $506,624.
Royal LePage’s quarterly House Price Survey shows the year-over-year change in prices for key housing segments in select national markets. See the chart.
Royal LePage Q1 2015 House Price Survey – Data Chart
About the Royal LePage House Price Survey
The Royal LePage House Price Survey is the largest, most comprehensive study of its kind in Canada, with information on seven types of housing in over 250 neighbourhoods from coast to coast. This release references an abbreviated version of the survey which highlights house price trends for the three most common types of housing in Canada in 90 communities across the country. A complete database of past and present surveys is available on the Royal LePage website at www.royallepage.ca. Current figures will be updated following the complete tabulation of the data for the first quarter of 2015. A printable version of the first quarter 2015 survey will be available online on May 15, 2015. Housing values in the Royal LePage House Price Survey are Royal LePage opinions of fair market value in each location, based on local data and market knowledge provided by Royal LePage residential real estate experts.
About Royal LePage
Serving Canadians since 1913, Royal LePage is the country’s leading provider of services to real estate brokerages, with a network of over 16,000 real estate professionals in more than 600 locations nationwide. Royal LePage is the only Canadian real estate company to have its own charitable foundation, the Royal LePage Shelter Foundation, dedicated to supporting women’s and children’s shelters and educational programs aimed at ending domestic violence. Royal LePage is a Brookfield Real Estate Services Inc. company, a TSX-listed corporation trading under the symbol TSX:BRE.
For more information visit: www.royallepage.ca.
Home prices recover in March says Teranet index
There was something of a turnaround in house prices in March following decline in February. The Teranet/National Bank HPI showed a nationwide increase of 0.29 per cent in the month and 4.73 per cent from a year ago. In February 8 of the 11 markets surveyed saw prices fall but in March 8 of the 11 increased. As you might expect Toronto and Vancouver heavily influenced the index with annual increases of 7.62 per cent and 5.3 per cent respectively. While Calgary prices are 2 per cent lower than their peak in the third quarter of 2014, they still managed a 0.19 per cent increase in the month to March; Edmonton saw a 0.38 per cent rise. There was decline in Halifax although the annual rise was the highest in the index at 8.4 per cent. Ottawa-Gatineau was the worst performer with prices down 0.33 per cent in the month.
Downgraded but still solid: IMF’s outlook for Canadian economy
The International Monetary Fund has downgraded its outlook for Canada’s economy. The revised growth forecast is 2.2 per cent this year (revised from 2.3 per cent in January) and 2 per cent in 2016 (down from 2.1). While any downgrade is not good news, the IMF’s figures reflect the weakness in the oil industry and it says that despite that growth should be “solid”. It says that while the US is benefitting from the lower energy costs, Canada has an energy sector that is relatively large so exposure is higher.
Thinking of being a Miami snowbird? Think again!
Canadians are finding the combination of a weaker loonie and increasing prices are making the popular snowbird market of Miami unaffordable. Chris Zoller, residential president of the Miami Association of Realtors says that rapid price increases have shifted the percentage of international buyers who are from Canada down to single figures; just 7 per cent. Don’t feel that your dream of a home in Florida has been shattered though as Zoller told the Financial Post that further north, in Orlando, there are still some great bargains and now might be the best time to start looking. Michael Dolega from TD Bank says that there is more demand for vacation property in the winter months so buying in the summer can often save thousands of dollars.
Royal Le Page achieves real estate first
Real estate company Royal Le Page has been named 2015 Outstanding Corporate Citizen by the Canadian Franchise Association and becomes the first real estate agency to achieve the accolade. The award has been made for the company’s support of local communities through its network of 600 brokerage offices and for nationwide philanthropy especially through its charity the Royal LePage Shelter Foundation. Phil Soper, President and CEO said: “I am extremely proud of the women and men of Royal LePage, for their ongoing financial commitment to our foundation, and for the compassion they show through countless hours of volunteer work for the cause. The good works we do wouldn’t be possible without the immense support we receive from business partners and clients.”
Bank of Canada’s policy report due this week; could be rate clues
When the Bank of Canada releases its latest monetary policy report this week mortgage lenders will be looking for any hints that could suggest an interest rate cut. It’s been three months since the last one but since then there has been a more cautious approach to further cuts. Most experts are not expecting this Wednesday to bring good news for borrowers; the bond markets for example are only factoring in a 10 per cent chance of a cut. The policy may be more revealing as the central bank weighs the continued weakness in the oil industry and sets out its forecast for the wider economy. There is little consensus on whether further interest rate cuts will be required and even less on when and how fast they might happen; this week’s report may provide some clues.
Is Edmonton avoiding the impact of the oil downturn?
Data released on Friday suggests that Edmonton is avoiding the worst impact of the oil downturn in Alberta. Figures from Statistics Canada showed better-than-expected employment levels while CMHC’s housing start stats were also far from disastrous. Although unemployment did rise; from 4.8 per cent in February to 5.3 per cent in March; it is still well-below the 6.8 per cent national average and Alberta’s 5.5 per cent. Meanwhile housing starts increased to 1,727 in March, almost 1000 higher than a year earlier. City of Edmonton chief economist John Rose told the Edmonton Journal that the region is not as closely linked with the oil industry as the rest of the province adding that: “We’ve got a lot of suppressed demand on the housing side that’s continuing to support our construction sector.”
Toronto building boom is ending says TD
A new report from TD Bank says that the building boom in Toronto is coming to an end. It predicts that house prices will reach their peak and decline soon and a large supply of new condos this year is the “greatest near-term risk for the market.” The report suggests a “cyclical downturn” rather than a crash though with condo prices trending lower of the coming years. It warns that investors may start pulling out of the condo market though as prices start to dip.
Are you looking to invest in property? If you like, we can get one of our mortgage experts to tell you exactly how much you can afford to borrow, which is the best mortgage for you or how much they could save you right now if you have an existing mortgage.
CMHC to Increase Mortgage Insurance Premiums
OTTAWA, April 2, 2015 -- As a result of its annual review of its insurance products and capital requirements, CMHC is increasing its homeowner mortgage loan insurance premiums for homebuyers with less than a 10% down payment. Effective June 1, 2015, the mortgage loan insurance premiums for homebuyers with less than a 10% down payment will increase by approximately 15%.
For the average Canadian homebuyer who has less than a 10% down payment, the higher premium will result in an increase of approximately $5 to their monthly mortgage payment. This is not expected to have a material impact on housing markets.
Premiums for homebuyers with a down payment of 10% or more and for CMHC’s portfolio insurance and multi-unit insurance products remain unchanged. The changes do not apply to mortgages currently insured by CMHC.
“CMHC completed a detailed review of its mortgage loan insurance premiums and examined the performance of the various sub-segments of its portfolio,” said Steven Mennill, Senior Vice-President, Insurance. “The premium increase for homebuyers with less than a 10% down payment reflects CMHC’s target capital requirements which were increased in mid-2014.”
CMHC is mandated to operate its mortgage loan insurance business on a commercial basis. The premiums and fees it collects and the investment income it earns cover related claims and other expenses while providing a reasonable rate of return on its capital holding target.
CMHC contributes to the stability of Canada’s housing finance system, including housing markets, by providing qualified Canadians in all parts of the country with access to a range of housing finance options in both good and bad economic times.
Effective June 1st, CMHC Purchase (owner occupied 1 – 4 unit) mortgage loan insurance premiums will be:
Loan-to-Value RatioStandard Premium
(Effective June 1st, 2015Up to and including 65%0.60%0.60%Up to and including 75%0.75%0.75%Up to and including 80%1.25%1.25%Up to and including 85%1.80%1.80%Up to and including 90%2.40%2.40%Up to and including 95%3.15%3.60%90.01% to 95% — Non-Traditional Down Payment3.35%3.85%CMHC reviews its premiums on an annual basis and will announce decisions on premiums following this review.
Canada Mortgage and Housing Corporation (CMHC) has been Canada's authority on housing for more than 65 years.
CMHC helps Canadians meet their housing needs. As Canada’s authority on housing, we contribute to the stability of the housing market and financial system, provide support for Canadians in housing need, and offer objective housing research and advice to Canadian governments, consumers and the housing industry. Prudent risk management, strong corporate governance and transparency are cornerstones of our operations.
For additional highlights please see attached backgrounder and key fact sheet.
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Information on this release:
Karine LeBlanc, Media Relations