If ever there was a reminder to look at the Canadian real estate market on a local level, not national, it is now.
The latest statistics from The Canadian Real Estate Association (CREA) show national home sales rebounded in January 2016, compared to the previous month. The National Home Price Index (HPI) rose 7.7 per cent year-over-year, and the big headline grabbing stat is that the national average sale price rose by 17 per cent.
But, underlining just how local real estate is, if you remove BC and Ontario from the equation, the national average price actually declined 0.3 per cent year-over-year in January.
Monthly sales increases in the Greater Toronto Area and the BC Lower Mainland fueled the national sales increase and offset monthly sales declines in Calgary, Edmonton and the Okanagan Region.
“Single-family homebuyers in the GTA and Lower Mainland of British Columbia had been expected to bring forward their purchase decisions before tightened mortgage regulations take effect in February 2016,” says CREA President Pauline Aunger. “If listings in these and nearby markets were not in such short supply, January sales activity would likely have reached even greater heights.
“Meanwhile, other major urban housing markets have an ample supply of listings, particularly where some homebuyers have become increasingly cautious amid an uncertain job market outlook. All real estate is local, and realtors remain your best source for information about sales and listings where you live or might like to in the future.”
Adds Gregory Klump, CREA’s chief economist: “January 2016 picked up where 2015 left off, with single-family homes in the GTA and Greater Vancouver in short supply amid strong demand standing in contrast to sidelined homebuyers and ample supply in a number of Alberta housing markets.
“Tighter mortgage regulations that take effect in February may shrink the pool of prospective homebuyers who qualify for mortgage financing and cause national sales activity to ease in the months ahead.”
The number of newly listed homes fell by 4.9 per cent in January compared to December, which more than reversed monthly gains that were posted in the final two months of 2015. Canada’s largest urban housing markets contributed to the monthly decline in new listings, including the BC Lower Mainland, Calgary, Edmonton, the GTA, Hamilton-Burlington, Ottawa and Montreal.
The Aggregate Composite MLS HPI gain of 7.73 per cent on a year-over-year basis in January is the largest increase in more than five years. Year-over-year price growth accelerated for two-storey single-family homes and apartment units.
Two-storey single-family homes continue to post the biggest year-over-year price gains (9.97 per cent), followed by one-storey single-family homes (6.86 per cent), townhouse/row units (6.46 per cent) and condo apartments (5.16 per cent).
Year-over-year price growth continues to range widely among housing markets tracked by the index. Greater Vancouver (20.56 per cent) and the Fraser Valley (16.94 percent) posted the largest gains, followed by the GTA (10.69 per cent).
By contrast, home prices retreated by about three per cent on a year-over-year basis in Calgary, by about two per cent in Saskatoon, and by less than one per cent in Regina. While prices have begun to decline in Calgary and Saskatoon only recently, they have been trending lower in Regina since early 2014.
Prices crept higher on a year-over-year basis in Ottawa (1.10 per cent), rose modestly in Greater Montreal (1.48 per cent) and strengthened further in Greater Moncton (6.57 per cent).
The national average price for homes sold in January 2016 was $470,297, up 17 per cent on a year-over-year basis.
Excluding the Greater Vancouver and Greater Toronto housing markets from the calculations, the average is a more modest $338,392 and the year-over-year gain is just eight per cent.
If BC and Ontario are excluded, the average price is further reduced to $286,911, representing small a decline of 0.3 per cent year-over-year.