Interesting info from this quarterly report from CREA: Edmonton has displaced Calgary as the having the highest price gains, nationally the market is more balanced, the number of sales are down nationally, sales are still on track to set a new record for 2006. What does all this mean? Nationally we are heading for a soft landing, no bubble to burst in Canada.
Housing activity most balanced in five years
ROMA LUCIW
The Globe and Mail
Signs that Canada’s housing market is in for a “soft landing” are building as the furious pace of activity in the housing market gives way to the most balanced conditions in more than five years, according to the Canadian Real Estate Association.
Although sales activity as measured through the Multiple Listing Service is easing, prices continued to shoot higher in September, with Edmonton displacing Calgary to take the top spot on the price gainers list.
Homes prices in Calgary, a city basking in oil riches, have skyrocketed in recent years as an insufficient supply coupled with surging demand created the tightest market conditions in the country. That same boom has also bolstered prices in Edmonton, although generally to a smaller extent.
“Existing home sales data in Canada revealed a changing of the guard at the top of home price inflation leaderboard in September,” said Douglas Porter, the deputy chief economist at BMO Nesbitt Burns, of the situation in Alberta’s two largest cities.
Related to this article
Existing home prices in Edmonton surged 46.3 per cent from September 2005, while prices in Calgary climbed 45.7 per cent on a year-over-year basis.
The average price of a house in Edmonton reached $278,732 last month and $369,928 in Calgary. The Greater Vancouver area was by far the priciest place to buy at $527,504, while existing homes in Toronto sold for an average $349,149.
Prices actually fell in only four of the 25 major MLS markets: Newfoundland & Labrador, Windsor-Essex, Saint John and Durham Region.
Still, the latest housing numbers suggest that the housing market continues to pull back from its recent record levels.
Sales of homes that were not brand new that moved through the MLS system reached 82,119 units on a seasonally adjusted basis in the third quarter of this year, a 2.5 per cent slide from the second quarter of 2006.
Overall existing sales fell 1.6 per cent last month from September, 2005, and are now down 8.5 per cent from year-ago levels.
“With the housing market becoming more balanced, price gains are slowing down in a number of major markets,” said CREA chief economist Gregory Klump, adding that those trends are expected to continue during the rest of this year and into 2007.
“Canada’s housing market continues to head for a soft landing,” he said.
Mr. Porter said Monday’s report offset some of the surprising gains in last week’s new home price index. The Statistics Canada report showed that the new housing price index surged 12.1 per cent in August from a year earlier — the biggest gain since 1989.
“The existing sales report is a bit more timely, and should provide some comfort to the Bank of Canada that the housing market is not picking up more steam,” Mr. Porter said. “Still, the bank is likely to renew its warning about hot home prices in its press statement tomorrow and or the Monetary Policy Report on Thursday.”
Vancouver, Calgary and Toronto — the three most expensive cities in the country — experienced the largest drops in sales in the quarter, which helped average price increases slow to 9 per cent on a year-over-year basis from 11.3 per cent in August.
Sales activity in Edmonton and Thunder Bay rose to quarterly records in the third quarter.
CREA said the third-quarter numbers show that the housing market is becoming more balanced, spurring smaller price increases. The dollar value of existing home sales slumped 2.7 per cent in the third quarter from the previous quarter, although new listings climbed 3.8 per cent to 143,760.
“The quarterly decline in sales combined with an increase in new listings caused the resale housing market to become more balanced than in any other quarter in the past 5.5 years,” CREA said.
In the first nine months of the year, transactions are above year-earlier levels and rose 1.4 per cent. Sales are still on track to set a record in 2006.
